Big Week Ahead for Magnificent 7 Earnings
Despite troubling headlines from the Strait of Hormuz, higher crude oil prices, the deficit of power infrastructure for the AI revolution, hearings on the direction of the Fed, the market has held onto its lofty ascent as first quarter earnings unfold.
Among the S&P 500 companies that have reported so far, a majority beat earnings and revenue estimates. While higher oil prices only impacted the third month of the quarter, supplies are stretched. For consumer discretionary names and other companies sensitive to high-priced crude, the scorecard could change, notes Joe Mazzola, Director of Trading Services at Charles Schwab.
The coming week is jam-packed with results from Magnificent 7 and S&P 500 stalwarts in the technology, energy, health, financial, and industrial sectors. As AI hyperscalers report earnings Wednesday and discuss spending on artificial intelligence, “investors want to see, ‘Am I getting a return on invested capital, at this point, on that spend?” Mazzola said.
Other areas to watch include freight, storage, auto, and semiconductor companies.
Here’s a curated list of S&P 500 companies reporting in the week to come.
Monday: Verizon (VZ), Cadence Design Systems (CDNS), Public Storage (PSA), Nucor (NUE).
Tuesday: Visa (V), The Coca-Cola Company (KO), Novartis (NVS), T-Mobile US (TMUS), Booking Holdings (BKNG), Corning (GLW), Seagate Technology Holdings (STX), BP (BP), Starbucks (SBUX), Spotify Technology (SPOT), United Parcel Service (UPS), Waste Management (WM), American Tower (AMT), Mondelez International (MDLZ), General Motors (GM), Bloom Energy (BE), Novartis (NVS) NXP Semiconductors (NXPI), Smithfield Foods (SFD), Spotify Technology (SPOT), Sysco (SYY), Kimberly-Clark (KMB), United Parcel Service (UPS), Visa (V), Caesars Entertainment (CZR), FirstEnergy (FE), Fortitude Gold (FTCO), Ingersoll-Rand (IR),
Wednesday: Google (GOOGL), Microsoft (MSFT), Amazon (AMZN), Meta Platforms (META), AbbVie (ABBV), AstraZeneca (AZN), KLA (KLAC), Qualcomm (QCOM), General Dynamics (GD), O’Reilly Automotive (ORLY), Canadian Pacific Kansas City (CP), Canadian National Railway (CNI), Phillips 66 (PSX), eBay (EBAY), Ford Motor (F), Chipotle Mexican Grill (CMG), Yum! Brands (YUM), GE HealthCare Technologies (GEHC), Biogen (BIIB), Humana (HUM).
Thursday: Apple (AAPL), Eli Lilly (LLY), Mastercard (MA), Caterpillar (CAT), Merck & Co (MRK), Amgen (AMGN), ConocoPhillips (COP), SanDisk (SNDK), Wedbush Capital (WEDC), Stryker (SYK), Bristol Myers Squibb (BMY), Altria Group (MO), Southern Company (SO), Parker-Hannifin (PH), Monolithic Power Systems (MPWR), The Cigna Group (CI), Royal Caribbean Group (RCL), Valero Energy (VLO), L3Harris Technologies (LHX), Carrier Global (CARR), Cardinal Health (CAH), Roblox (RBLX), ResMed (RMD), Redtape Technologies (RDT), TechnipFMC (FTI), Rivian Automotive (RIVN), Sweetwater (SW), International Paper (IP), Roku (ROKU), Tenet Healthcare (THC)
Friday: Berkshire Hathaway (BRK.B), Exxon Mobil (XOM), Chevron (CVX), Colgate-Palmolive (CL), Dominion Energy (D), LyondellBasell Industries (LYB), Church & Dwight (CHD), Newell Brands (NWL).
We grabbed some quotes from last week’s Schwab Network interviews to help guide thinking in the week to come on energy, technology, asset allocation and more:
On the risk to the AI buildout and what the U.S. power grid can support:
Michael D. Farkas, founder, CEO and executive chairman, NextNRG (NXXT): “We are way behind. The amount of money that they are looking to deploy in AI and data centers … in the trillions of dollars. And the limiting factor is one and only one thing, and that's energy generation and providing the energy that's necessary for the deployment of AI as well as those data centers. We're lacking in a very big way.” (See Farkas: We're Behind on AI & Data Center Funding as Energy Demand Surges | Schwab Network)
On the artificial intelligence trade and trends in semiconductor exchange-traded fund flows:
Kristy Akullian, Head of iShares Investment Strategy for the Americas, Blackrock: “The semiconductor market has been favoring hardware over software in the AI trade. …Looking at semiconductors specifically, where we are right now, in terms of ETF flows, it is on track to be the largest ever month for inflows into semiconductor ETFs in particular. Investors are getting really granular in the way that they want to allocate to that AI trade. At the same time, we are seeing one of the worst months ever for something like an equal-weighted ETF.” (See Kristy Akullian on the Semiconductor Surge and Global AI Diversification | Schwab Network)
Why companies with mid-sized market capitalizations may be attractive relative to smaller and larger businesses:
Amy Zhang, Portfolio Manager, Alger: “I manage midcaps. Large caps have had a large run. In active management, we look for outperformers. It is an opportune time to look at midcaps … compared to large caps, they have higher growth rates, the law of smaller numbers for compounding, and more discovery value with less people covering midcaps than large caps. Compared to small caps, they have better liquidity and higher financial quality and are less impacted by rates. As an asset class, midcaps are under allocated, and in terms of valuation, are trading at an approximately 22% discount … there can be a reversion to the mean in valuation …” (See Amy Zhang's Health Care Picks Amid Geopolitical Uncertainty | Schwab Network)
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