The 2024 Q2 earnings season is in full swing, with a plethora of notable names gearing up to report next week. The current season has brought about positivity, with the prominent banks’ results not causing any alarm bells among investors.
Among the forthcoming reports, several Mag 7 members, including Meta Platforms META, Amazon AMZN, and Apple AAPL, are poised to disclose their financial updates. These three stocks have been standout performers in 2024, sparking curiosity about the sustainability of their success.
Let’s delve deeper into their standing as they approach their earnings announcements.
Apple’s China Sales: A Critical Evaluation
Apple faced scrutiny for a sluggish start to 2024 but has since gained substantial momentum, registering a 14% increase in its year-to-date performance. Concerns surrounding China operations and AI competitiveness initially hampered its growth, although recent developments indicate a temporary alleviation of these worries.
The stock holds a Zacks Rank #2 (Buy), with earnings predictions for the upcoming period gradually improving over the last few months. The expected $1.34 earnings per share reflect a 6% rise from the corresponding period last year, with sales also anticipated to increase by 2.7% year-over-year.
The company encountered challenges in China in its latest period, but despite this, its sales aligned more closely with expectations, missing the consensus estimate by $220 million compared to a significant $2.5 billion miss in the prior period.
Furthermore, there have been positive reports on iPhone shipments in China lately, which have assuaged apprehensions. Investors will closely monitor the company’s Services segment, a consistent growth driver that has reduced dependence on iPhone performance.
The Services segment has consistently outperformed expectations in recent periods, except for one instance.
Amazon’s AWS Performance: A Key Focus
During its recent period, AMZN showcased robust operational performance, with a substantial 220% year-over-year increase in operating income to $15.3 billion. Of particular note, AWS delivered strong results, achieving net sales of $25 billion, marking a 17% year-over-year growth and breaking a streak of negative surprises in this metric.
Concerns about a potential deceleration in cloud services, which were present in previous periods, seem to have dissipated based on the recent positive results leading up to the upcoming release.
Scrutinizing Meta Platforms CapEx
Enhanced operational efficiencies at META have significantly bolstered its profitability, translating into notable EPS growth over recent quarters.
Investors will be interested in insights regarding CapEx trends, especially concerning AI, following Alphabet’s quarterly report. Earnings estimates for the upcoming release have seen gradual increases in recent months, with the anticipated $4.69 per share pointing to a significant 45% year-over-year growth.
On the key metrics front, the Zacks Consensus Estimate for Advertising revenue stands at $37.5 billion, a 20% increase from the year-ago period. It’s worth noting that Alphabet’s Advertising business demonstrated positive results, with $64.6 billion in sales reflecting a 12% year-over-year growth.
META shares experienced a decline after its recent quarterly results, with concerns elevated due to a heightened CapEx guidance for the current fiscal year. This development will be closely monitored by investors, drawing parallels with Alphabet’s unexpected CapEx increase.
Final Thoughts on the Earnings Season
The 2024 Q2 earnings season is in full swing, with a highly anticipated reporting schedule this week. Tech continues to play a pivotal role in driving positive outcomes as another strong showing is expected.
This week sees several Mag 7 members unveiling their performance, including Meta Platforms META, Amazon AMZN, and Apple AAPL. Given their remarkable achievements in 2024, the scrutiny awaiting their results could make this week the most significant of the Q2 cycle.