Big tech is dominating the stock market with the Magnificent Seven – Amazon (AMZN), Apple (APPL), Microsoft (MSFT), Meta (META), Alphabet (GOOG,GOOGL) Tesla (TSLA), and Nvidia (NVDA) – taking up almost 30% of the entire S&P 500 market cap. Many of the companies will be reporting their third-quarter earnings this week, with investors keeping a close eye for any potential surprises. Yahoo Finance Markets Reporter Jared Blikre joins the Live show to take a look at the charts, putting these numbers into perspective.
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Video Transcript
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JOSH LIPTON: The big test for markets earnings from the Magnificent Seven. Jared Blikre is on the floor of the New York Stock Exchange with a closer look as the moment of truth arrives. Jared.
JARED BLIKRE: That’s right, the moment of truth. The market has been riding on these fumes. And they’re really not even fumes since the beginning of the year. I’m going to talk about market cap concentration in a second. But first, we have some big tech earnings on deck– Microsoft, Alphabet, tomorrow afternoon.
I’m looking at the schedule on the YFi interactive. Wednesday, we have Meta, Amazon, Thursday. And you’ll have to wait until next week for Apple. But just thinking about the market concentration, this goes– this is a chart that goes back 10 years and shows how much of these top 10 stocks have been a percentage of the S&P 500 market cap. 30% right now, that is the same amount that it was when the market peaked at the beginning of 2022. That was before the Fed got hawkish and went all the way down to 20% here, but back up to 30%, that’s a big number, with a lot riding on these results, because 24% of EPS the entire S&P 500 is being taken up by these seven stocks.
Now going back to the YFi interactive this is a year to date look at the returns on the NASDAQ 100. And some pretty impressive returns for the mega caps, those on the left side of the screen there. Amazon up 51%. Google, a little bit more. But Meta up 161%, Nvidia, 194%.
And let me just show you with some of the expected results here that we’re looking for. Alphabet, they’re expected to have revenue of 63.04 billion. That is after you take out traffic acquisition costs. For total revenue, they’re looking at 75.54. YouTube, that’s a big area, that spotlight, that’s going to be on 7.8 billion in sales. That’s what the Street is expecting.
But AI is going to be a huge focus, of course. Alphabet has barred ChatGPT as Microsoft’s offering through OpenAI, that they have a large investment. Google has incorporated AI throughout all of its products. So with all the hype that ChatGPT and barred to a lesser degree get, it’s really embedded in all of their offerings here.
Then you have the DOJ’s antitrust suit against Google. That started last month. There’s been some interesting developments via that. That’s probably not going to come to a head until next year. And then it could be a fine. There could be some other regulatory actions there. We have no idea.
By the way, I think Google is facing something, a $9 billion worth of fines in the EU. I mentioned YouTube, there’s going to be a lot of focus on monetization there. And then with respect to Microsoft, they’re looking for– the Street is looking for revenue of $54.54 billion. That’s spread across personal computing, 12.89 billion, intelligent cloud, 23.61, productivity and business process revenue, 18.29 billion.
I do have a comment from Jefferies Brent Thill over there really focused on AI. He has a buy recommendation on Microsoft with a price tag of– price target of 400. He’s saying we’re looking for qualitative and quantitative commentary regarding AI’s impact to topline specifically color on M365 copilots ramp and its impact on fiscal second quarter and the full year ’24, 2024 numbers. So AI going to be in the spotlight there. Again, that’s Microsoft and Alphabet. We’re going to be covering that tomorrow afternoon, 24 hours from now guys.
JULIE HYMAN: All right. Can’t wait. Thanks so much, Jared. Appreciate it.
