How crucial are next week's US stock earnings reports? Four out of the seven giants, which account for 40% of the S&P 500 market value, will take the stage!

As the S&P 500 index experiences its worst week in over a year, the spotlight is now on the upcoming earnings season for US stocks.

Next week, approximately 178 S&P 500 index component companies will report their earnings, with these companies accounting for over 40% of the total market capitalization of the index. However, the biggest expectations are from the large tech companies, including Tesla, Meta, Microsoft, Google's parent company Alphabet, all set to announce their earnings next week.

According to media think tank data, the profits of the "Big Seven Tech" companies are expected to surge by 38% in the first quarter. Excluding these seven companies, the profits of the remaining companies in the S&P 500 index are projected to decrease by 3.9%.

However, Wall Street anticipates a reversal of this trend as the year progresses. Media think tank data shows that by the first quarter of 2025, the profits of these seven companies are expected to grow by 17.5%, while the profits of the remaining companies in the S&P 500 index are forecasted to increase by nearly 18%.

Wall Street Not So Optimistic About This Earnings Season

During the first quarter of this year, the S&P 500 index has risen by 10.16% cumulatively. However, according to compiled data from the media, Wall Street strategists are not as optimistic about the performance of US stock companies in the first quarter: the overall profit growth of the S&P 500 index component companies is expected to be only 2.4% year-on-year.

But this situation can also be interpreted as a positive sign: against the backdrop of already pessimistic market expectations, if the performance of US stock companies shines, it will boost market confidence for further growth. In fact, a similar scenario played out three months ago: at that time, the market expected poor performance from US stock companies in the fourth quarter of last year, but the actual earnings performance far exceeded expectations, driving the market up.

Analyst Wendy Soong stated, "As traders anticipate the Federal Reserve to cut interest rates later this year, this may lead to stronger consumer spending and economic activity, resulting in better profit growth and higher stock prices."

Four of the Big Seven Tech Companies Set to Report

Currently, US tech stocks are facing selling pressure, with the Nasdaq 100 index recording its largest weekly decline since November 2022. Even the darling of artificial intelligence, NVIDIA, was not spared, with its stock price plummeting by 10% on Friday, causing a market capitalization loss of $212 billion.

In this atmosphere, the performance of tech giants will also face market scrutiny next week. First up among the Big Seven is Tesla, which will announce its first-quarter earnings for 2024 next Tuesday.

Barclays analyst Dan Levy predicts that Tesla's first-quarter report may show the first negative free cash flow since the first quarter of 2020, with the gross margin excluding regulatory credits possibly dropping to 14.6%, a decrease of 2.6 percentage points compared to the previous quarter Meta's new quarterly financial report will be released early Thursday morning. The market expects Meta's first-quarter revenue to grow by 26%, with net profit nearly doubling compared to the same period last year.

Microsoft will release its financial report early Friday morning. The market expects Microsoft's first-quarter revenue and profit to both achieve growth of over 15%.

Google's parent company, Alphabet, will also release its financial report on Friday. Despite doubts surrounding Google's artificial intelligence plans, the market still expects its first-quarter revenue to grow by nearly 14%, with net profit increasing by over 30%.

In addition, Amazon is expected to release its first-quarter financial report at the end of April, while Apple and NVIDIA will each release their reports in early and mid-May, respectively