Profit growth for US tech giants may slow.
1min read By Zhou Lulu, a reporter with China Business Journal
This week, the US stock market enters a period of intensive earnings reporting, with Apple, Microsoft and Amazon leading the earnings super week. According to data compiled by institutions, the five largest companies in the S&P 500 are expected to see an average 19% growth in profits in the third quarter, the slowest overall profit growth in six quarters. Some institutional persons said that the intensive earnings reports of large technology companies may exacerbate the volatility of US stocks, considering that the US presidential election will enter the final stage and a series of economic data will be released in the next week.
Focus on the performance of technology giants
This week, five of the seven sisters in the US technology sector will disclose their latest quarterly financial reports, namely Apple, Alphabet, Microsoft, Amazon and Meta. However, the market gradually has pessimistic voices about the latest quarterly earnings reports and future performance guidance of US technology giants.
According to data compiled by Bloomberg Intelligence, the five largest companies in the S&P 500, namely Apple, Nvidia, Microsoft, Alphabet and Amazon, are expected to see an average 19% growth in profits in the third quarter, the slowest overall profit growth in six quarters. In addition, the profit growth gap between large technology companies in the US stock market and other companies is expected to continue to narrow by 2025.
According to FactSet statistics, Wall Street currently expects S&P 500 index components to see a 4.7% year-on-year growth in profits in the third quarter, far lower than the 7.9% in the previous quarter, the lowest growth in four quarters.
Analysts said that the performance of technology giants will to some extent determine whether US stocks can continue to rise, as the valuations of technology stocks are already high. Michael O'Rourke, chief market strategist of Jones Trading, admitted: "The seven major technology companies in the US need to meet investors' high expectations to maintain their high valuations."
Economic data may bring disturbance
It is worth noting that the series of economic data to be released in the US this week may bring disturbance to overseas financial markets including US stocks.
Beijing time on Wednesday night, the US Commerce Department will release the initial values of the year-on-year and quarterly growth of the US GDP in the third quarter. Wall Street institutions generally expect the year-on-year growth of the US GDP in the third quarter to be 3.0%, the same as the second quarter.
