The second-quarter earnings season is fully underway with big-tier banks reporting earnings this week. Bank of America (BAC) and Morgan Stanley (MS) are scheduled to report earnings today while U.S. Bancorp (USB) will report earnings tomorrow. Going into Q2 earnings, Wall Street analysts are betting on the tech sector, especially the tech giants with exposure to AI, to deliver strong earnings for the last quarter. Wedbush Securities analyst Dan Ives believes Microsoft Corporation (MSFT), Alphabet Inc. (GOOG), Amazon.com, Inc. (AMZN), Palantir Technologies (PLTR), and Meta Platforms (META) will be among the standout performers this earnings season. The analyst believes tech stocks will surge another 15% by the end of the year, adding to recent gains. Overall, Q2 earnings are likely to add more fuel to the stock market rally with Refinitiv estimates pointing to 10.1% YoY growth in S&P 500 earnings to $492.8 billion.
What The Analysts Are Saying
Analysts expect Q2 earnings to reveal the underlying strength of the U.S. economy despite inflationary pressures and geopolitical uncertainty. In addition to the tech stocks highlighted by Wedbush analyst Dan Ives, investors may want to keep a close eye on a few other companies including Netflix, Inc. (NFLX), which is expected to report earnings this Thursday. JPMorgan analyst Doug Anmuth believes Netflix will report net new subscriber additions of 5 million to 6 million for Q2, easily beating the consensus estimate for 3.7 million subscriber additions. The analyst, based on this expectation, raised his Netflix price target to $750 last Friday, implying an upside of almost 15%.
Semiconductor giant Taiwan Semiconductor (TSM), which is expected to report earnings on Thursday, is another company to closely monitor with analysts increasingly becoming bullish on the outlook for the chipmaker amid the strong demand for AI chips. Needham analyst Charles Shi, in a note to clients, wrote yesterday that the company is likely to boost its sales forecast for 2024 after reporting earnings this week. Based on this expectation, the analyst raised his price target for TSM from $168 to $210, implying an upside potential of 14%.
Tesla, Inc. (TSLA) will report earnings on July 23, and substantial volatility is on the cards for TSLA stock following the earnings print as investors are closely watching Tesla’s sales guidance for the remainder of the year to determine the path forward for Tesla stock.
Both Dilantha DeSilva and Stocks.News have positions in Microsoft and Meta. Stocks.News also has positions in Tesla, Netlfix, Amazon, and Alphabet.
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Dilantha DeSilva
Seasoned markets reporter and news editor
Dilantha is a former buy-side equity analyst who now contributes to Seeking Alpha, GuruFocus, TipRanks, and ValueWalk. He is the founder of Beat Billions, a premium investment research subscription service on Seeking Alpha’s Marketplace. He has appeared on CNBC and Bloomberg to discuss stock markets and the global economy.