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"Magnificent Seven" Earnings Underway: ETFs in Spotlight
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We are in the thick of the third-quarter earnings season and the so-called "Magnificent Seven" are in focus. This is especially true as these have driven nearly all of the S&P 500’s 12% year-to-date gains because of their outsized weighting in the index. However, the seven stocks have stumbled in the third quarter as a surge in yields threatens to dull the allure of equities.
Among the remaining companies, some are expected to report next week and others thereafter.
Overall, the big seven companies are a big contributor to S&P earnings. Third-quarter earnings of this group of companies are expected to grow 34.9% from the same period last year on 11.2% higher revenues.
Microsoft and Alphabet are expected to release results on Oct 24 after market close, while Meta Platforms is expected to report on Oct 25. Amazon will report on Oct 26 and Apple on Nov 2. Nvidia is expected to come up with earnings on Nov 15 (see: all the Technology ETFs here).
Microsoft
Microsoft has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Microsoft saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. Its earnings track is impressive, with the four-quarter earnings surprise being 5.27%, on average. The Zacks Consensus Estimate indicates earnings growth of 12.8% and modest revenue growth of 8.6% from the year-ago quarter. Microsoft belongs to a bottom-ranked Zacks industry (bottom 44%) and has shed 2.3% over the past three months. It has a solid Growth Score of B.
Alphabet
Alphabet has an Earnings ESP of +0.89% and Zacks Rank #3. It saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. The company’s earnings surprise track record over the past four quarters is not good, with the negative earnings surprise being 0.91%, on average. Earnings are expected to increase 36.8%, while revenues are expected to grow 10.2% from the year-ago quarter. Alphabet has a solid Growth Score of A and falls under a top-ranked Zacks industry (top 37%). The Internet behemoth has climbed 6.7% in the last three months.
Meta Platforms
Meta Platforms has an Earnings ESP of +3.98% and Zacks Rank #3. The social media giant saw positive earnings estimate revision of 4 cents for the to-be-reported quarter over the past 30 days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock.
The current Zacks Consensus Estimate for the yet-to-be-reported quarter indicates massive year-over-year earnings growth of 117.7%. Revenues are also expected to increase 20.6%. Meta Platforms delivered an earnings surprise of 18.99%, on average, in the last four quarters. The stock has a solid Growth Score of A and belongs to a top-ranked Zacks industry (top 29%). Shares of META have surged about 6% over the past three months.
Amazon
Amazon has an Earnings ESP of 0.00% and a Zacks Rank #2. The stock saw no earnings estimate revision over the past 30 days for the third quarter. The Zacks Consensus Estimate indicates whopping year-over-year earnings growth of 190% and substantial revenue growth of 11.4% for the to-be-reported quarter. Additionally, Amazon’s earnings surprise history is impressive, with the four-quarter average surprise being 40.96%. The stock has a solid Growth Score of A but falls under a top-ranked Zacks industry (top 37%).
Apple
Apple has an Earnings ESP of 0.00% and a Zacks Rank #3. Apple saw no earnings estimate revision over the past 30 days for the fiscal fourth quarter. The iPhone maker has a strong track record of positive earnings surprise. It delivered an average earnings surprise of 2.6815% in the trailing four quarters. The Zacks Consensus Estimate indicates a modest year-over-year increase of 7.7% for earnings and a decrease of 1.3% for revenues. Apple belongs to a top-ranked Zacks Industry (top 21%) and has a solid Growth Score of B.
Nvidia
Nvidia currently has an Earnings ESP of +6.93% and a Zacks Rank #1. This videogame-gear specialist saw a positive earnings estimate revision of a couple of cents over the past 30 days for the third quarter of fiscal 2024. Nvidia’s earnings surprise history is good as it delivered an earnings surprise of 9.79%, on average, in the last four quarters. Nvidia is expected to post earnings and revenue growth of 475.9% and 171.7%, respectively, for the to-be-reported quarter. The stock belongs to a top-ranked Zacks Industry (top 21%) and has a solid Growth Score of A.
ETFs to Tap
Given this, investors may want to play these stocks with the help of ETFs. Below, we have highlighted some ETFs having the largest exposure to "Magnificent Seven."
Roundhill BIG Tech ETF offers investors precise exposure to the “Magnificent Seven.” It has amassed $5.9 million in its asset base and charges 29 bps in fees per year. It trades in an average daily volume of 6,000 shares.
This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of these seven stocks. MicroSectors FANG+ ETN has accumulated $133.3 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 178,000 shares a day on average and has a Zacks ETF Rank #3 (Hold) (read: 5 ETFs That Are Up More Than 40% So Far This Year).
Vanguard Mega Cap Growth ETF tracks the CRSP US Mega Cap Growth Index. It holds 88 securities in its basket, with "Magnificent Seven" collectively accounting for 56.6% of the total assets. Vanguard Mega Cap Growth ETF charges 7 bps in annual fees and trades in a good volume of around 300,000 shares a day on average. The fund has AUM of $14.2 billion and a Zacks ETF Rank #2 (Buy).
Invesco S&P 500 Top 50 ETF follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of 50 of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. It holds 55 stocks in its basket and "Magnificent Seven" accounts for a combined 49.2% share. Invesco S&P 500 Top 50 ETF has been able to manage assets worth $2.5 billion but trades in a good volume of about 468,000 shares a day on average. XLG charges 20 bps in annual fees and has a Zacks ETF Rank #3.
iShares S&P 100 ETF offers exposure to 101 largest U.S. companies. "Magnificent Seven" accounts for a combined 41.1% share. iShares S&P 100 ETF has amassed $8.6 million in its asset base and charges 20 bps in annual fees. It trades in average daily volume of 185,000 shares and has a Zacks ETF Rank #3.
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"Magnificent Seven" Earnings Underway: ETFs in Spotlight
We are in the thick of the third-quarter earnings season and the so-called "Magnificent Seven" are in focus. This is especially true as these have driven nearly all of the S&P 500’s 12% year-to-date gains because of their outsized weighting in the index. However, the seven stocks have stumbled in the third quarter as a surge in yields threatens to dull the allure of equities.
The seven stocks are Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Alphabet (GOOG - Free Report) , (GOOGL - Free Report) , Amazon (AMZN - Free Report) , Nvidia (NVDA - Free Report) , Tesla (TSLA - Free Report) and Meta Platforms (META - Free Report) . Tesla came up with dismal results, pushing shares down by more than 9%. (read: Tesla Posts Weak Q3 Earnings: ETFs in Focus).
Among the remaining companies, some are expected to report next week and others thereafter.
Overall, the big seven companies are a big contributor to S&P earnings. Third-quarter earnings of this group of companies are expected to grow 34.9% from the same period last year on 11.2% higher revenues.
Microsoft and Alphabet are expected to release results on Oct 24 after market close, while Meta Platforms is expected to report on Oct 25. Amazon will report on Oct 26 and Apple on Nov 2. Nvidia is expected to come up with earnings on Nov 15 (see: all the Technology ETFs here).
Microsoft
Microsoft has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Microsoft saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. Its earnings track is impressive, with the four-quarter earnings surprise being 5.27%, on average. The Zacks Consensus Estimate indicates earnings growth of 12.8% and modest revenue growth of 8.6% from the year-ago quarter. Microsoft belongs to a bottom-ranked Zacks industry (bottom 44%) and has shed 2.3% over the past three months. It has a solid Growth Score of B.
Alphabet
Alphabet has an Earnings ESP of +0.89% and Zacks Rank #3. It saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. The company’s earnings surprise track record over the past four quarters is not good, with the negative earnings surprise being 0.91%, on average. Earnings are expected to increase 36.8%, while revenues are expected to grow 10.2% from the year-ago quarter. Alphabet has a solid Growth Score of A and falls under a top-ranked Zacks industry (top 37%). The Internet behemoth has climbed 6.7% in the last three months.
Meta Platforms
Meta Platforms has an Earnings ESP of +3.98% and Zacks Rank #3. The social media giant saw positive earnings estimate revision of 4 cents for the to-be-reported quarter over the past 30 days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock.
The current Zacks Consensus Estimate for the yet-to-be-reported quarter indicates massive year-over-year earnings growth of 117.7%. Revenues are also expected to increase 20.6%. Meta Platforms delivered an earnings surprise of 18.99%, on average, in the last four quarters. The stock has a solid Growth Score of A and belongs to a top-ranked Zacks industry (top 29%). Shares of META have surged about 6% over the past three months.
Amazon
Amazon has an Earnings ESP of 0.00% and a Zacks Rank #2. The stock saw no earnings estimate revision over the past 30 days for the third quarter. The Zacks Consensus Estimate indicates whopping year-over-year earnings growth of 190% and substantial revenue growth of 11.4% for the to-be-reported quarter. Additionally, Amazon’s earnings surprise history is impressive, with the four-quarter average surprise being 40.96%. The stock has a solid Growth Score of A but falls under a top-ranked Zacks industry (top 37%).
Apple
Apple has an Earnings ESP of 0.00% and a Zacks Rank #3. Apple saw no earnings estimate revision over the past 30 days for the fiscal fourth quarter. The iPhone maker has a strong track record of positive earnings surprise. It delivered an average earnings surprise of 2.6815% in the trailing four quarters. The Zacks Consensus Estimate indicates a modest year-over-year increase of 7.7% for earnings and a decrease of 1.3% for revenues. Apple belongs to a top-ranked Zacks Industry (top 21%) and has a solid Growth Score of B.
Nvidia
Nvidia currently has an Earnings ESP of +6.93% and a Zacks Rank #1. This videogame-gear specialist saw a positive earnings estimate revision of a couple of cents over the past 30 days for the third quarter of fiscal 2024. Nvidia’s earnings surprise history is good as it delivered an earnings surprise of 9.79%, on average, in the last four quarters. Nvidia is expected to post earnings and revenue growth of 475.9% and 171.7%, respectively, for the to-be-reported quarter. The stock belongs to a top-ranked Zacks Industry (top 21%) and has a solid Growth Score of A.
ETFs to Tap
Given this, investors may want to play these stocks with the help of ETFs. Below, we have highlighted some ETFs having the largest exposure to "Magnificent Seven."
Roundhill BIG Tech ETF (BIGT)
Roundhill BIG Tech ETF offers investors precise exposure to the “Magnificent Seven.” It has amassed $5.9 million in its asset base and charges 29 bps in fees per year. It trades in an average daily volume of 6,000 shares.
MicroSectors FANG+ ETN (FNGS - Free Report)
This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of these seven stocks. MicroSectors FANG+ ETN has accumulated $133.3 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 178,000 shares a day on average and has a Zacks ETF Rank #3 (Hold) (read: 5 ETFs That Are Up More Than 40% So Far This Year).
Vanguard Mega Cap Growth ETF (MGK - Free Report)
Vanguard Mega Cap Growth ETF tracks the CRSP US Mega Cap Growth Index. It holds 88 securities in its basket, with "Magnificent Seven" collectively accounting for 56.6% of the total assets. Vanguard Mega Cap Growth ETF charges 7 bps in annual fees and trades in a good volume of around 300,000 shares a day on average. The fund has AUM of $14.2 billion and a Zacks ETF Rank #2 (Buy).
Invesco S&P 500 Top 50 ETF (XLG - Free Report)
Invesco S&P 500 Top 50 ETF follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of 50 of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. It holds 55 stocks in its basket and "Magnificent Seven" accounts for a combined 49.2% share. Invesco S&P 500 Top 50 ETF has been able to manage assets worth $2.5 billion but trades in a good volume of about 468,000 shares a day on average. XLG charges 20 bps in annual fees and has a Zacks ETF Rank #3.
iShares S&P 100 ETF (OEF - Free Report)
iShares S&P 100 ETF offers exposure to 101 largest U.S. companies. "Magnificent Seven" accounts for a combined 41.1% share. iShares S&P 100 ETF has amassed $8.6 million in its asset base and charges 20 bps in annual fees. It trades in average daily volume of 185,000 shares and has a Zacks ETF Rank #3.