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The 'Magnificent 7' term needs to be retired after Q1 earnings: Goldman Sachs

Published 05/18/2024, 05:42 PM
© Reuters.

Goldman Sachs has observed a significant shift among the top technology companies, often dubbed the "Magnificent 7," following their first-quarter results.

Collectively, Apple Inc (NASDAQ:AAPL)., Inc (NASDAQ:AMZN)., Alphabet (NASDAQ:GOOGL) Inc., Meta Platforms Inc (NASDAQ:META)., Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Tesla (NASDAQ:TSLA) Inc. saw their profits increase by 48% year-over-year.

This growth was supported by a 14% increase in sales and a margin expansion of 521 basis points, bringing the aggregate margin to 22.8%.

However, this overall performance conceals the varying fortunes of the individual companies, the analysis showed.

Meta Platforms, Alphabet, and Amazon outperformed expectations with sales growth of 27%, 15%, and 13% respectively, leading to year-to-date share price increases of 34%, 25%, and 21%. These gains reflect a stronger market performance for these companies relative to some of their peers.

In stark contrast, Apple's sales saw a 4% decline, while Tesla experienced a 9% drop in revenues. Consequently, their stock prices have been impacted, with Apple's shares dipping by 1% and Tesla's plummeting by 30%.

This downturn has led to Tesla's ranking falling to the 12th largest stock in the S&P 500 index.

"The sobriquet “Magnificent 7” needs to be retired following 1Q results," Goldman Sachs analysts said in a note.

The report added that wide dispersion in performance highlights the diverse challenges and opportunities faced by these industry leaders.

While some continue to expand and beat market expectations, others are navigating more difficult economic conditions.

The upcoming NVIDIA results will add another piece to the puzzle of the tech industry's current landscape.

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