Earnings from ‘Magnificent Seven’ will determine stock markets’ path for 2023

By George Prior 

All eyes are on ‘The Magnificent Seven’ in this earnings seasons, with Tesla reporting on Wednesday, as these stocks will determine the market’s performance for the rest of this year and into 2024.

This is the assessment of Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, as Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta Platforms, all report Quarter 2 earnings in the next week or so.

He says: “Investors around the world will be pouring over the earnings and guidance reports of these major growth and tech names in the next few days.

“These mega cap companies’ values have jumped between 40% and 200% so far this year.

“These jumps have accounted for the bulk of the S&P 500’s 17% year-to-date advance and pushed-up the main stock market in the world’s largest economy to its highest level since April 2022.

“On the S&P 500, the seven stocks make up almost 30% of the index’s weight.

“Therefore, their earnings and guidance will, we expect, determine the market’s trajectory for the rest of this year and into 2024.”

The deVere CEO continues: “The Magnificent Seven are going to need robust earnings to explain their sky-high valuations.

“In addition, they will need the guidance to indicate future quarters to be higher than aniticpated for shareholders to receive additional gains. Should this not happen, we could see these stocks shed some of the advances.”

Tesla and Netflix will be the ones to watch on Wednesday. Microsoft and Meta are among those reporting next week.

Recently Nigel Green warned that the volume is “getting louder” and the “frenzy is reaching fever pitch” about the so-called Magnificent Seven stocks.

“This hype is dangerous as it could lead investors to assume that these stocks are a silver bullet to build long-term wealth – and they are not, at least not on their own.

“While I believe that exposure to these mega-cap tech stocks should be part of almost every investor’s portfolio, as they have robust fundamentals and are future-focused, especially in AI, they should not be exclusive.”

The deVere CEO concludes: “Such is their weight, the Magnificent Seven earnings we receive in the next week or so will set global investors’ portfolio positioning for the foreseeable future.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.