US stock market: April-June quarterly report preview
2024-09-03
■ Overall performance is good, but there are concerns about the delayed profitability of technology giants investing in artificial intelligence (AI)
■ Supported by stable profit growth and interest rate cuts, the S&P500 index is expected to operate in a high range in the short term, steadily
As of August 30th, 493 companies in the S&P500 have released their quarterly reports from April to June. According to financial information company LSEG I/B/E/S, 79% of these companies reported earnings per share (EPS) that exceeded market expectations. EPS for April to June increased by 13.0% year-on-year (actual data for companies that have been announced, market expectations for companies that have not been announced) and is expected to exceed market expectations in early July (year-on-year growth of 10.6%). The financial results of major companies have been evaluated as good. Divided by industry, industries such as information technology (IT, up 21.2%), finance (up 20.6%), and healthcare (up 20.4%) have shown high-profit growth.
Although EPS is expected to slow down slightly in the July-September period (growth of 5.7%), it is expected to maintain over 10% after the October-December period (growth of 13.5%). In addition, profits are expected to steadily increase in 2024 (up 10.2%) and 2025 (up 15.3%). So far, the main drivers of EPS growth have been technology giants in communication services, IT, and consumer goods, which have benefited from the expansion of demand for artificial intelligence (AI). By 2025, profit growth is expected to be reflected in more industries. Supported by stable growth in corporate performance and interest rate cuts by the Federal Reserve (FRB), the S&P500 index is expected to continue oscillating at a high level around 5600 points.
Last week's financial reports of major semiconductor companies showed that their revenue, earnings per share (EPS) for the May-July period, and income for the August-October period exceeded market expectations, indicating strong demand for artificial intelligence (AI). However, this financial reporting season has raised concerns about the delayed profitability of AI-related investments for multiple tech giants, and we need to be vigilant about whether these investments will be suppressed in the future. The forecasted price-to-earnings ratio (PER, weighted average benchmark) of the S&P500 is 21.5 times, significantly higher than the average level since 2018 (18.7 times), still showing a strong sense of overvaluation. The equal weight prediction PER of S&P500 has risen to 17.4 times, with a gap of about four times between the two, which has narrowed from about five times in early July but continues to expand. The concentration of funds in some stocks benefiting from the expansion of demand for artificial intelligence (AI) has not been fully resolved, and it is still necessary to continue to pay attention to the financial reports and performance prospects of related stocks.
■ Supported by stable profit growth and interest rate cuts, the S&P500 index is expected to operate in a high range in the short term, steadily
As of August 30th, 493 companies in the S&P500 have released their quarterly reports from April to June. According to financial information company LSEG I/B/E/S, 79% of these companies reported earnings per share (EPS) that exceeded market expectations. EPS for April to June increased by 13.0% year-on-year (actual data for companies that have been announced, market expectations for companies that have not been announced) and is expected to exceed market expectations in early July (year-on-year growth of 10.6%). The financial results of major companies have been evaluated as good. Divided by industry, industries such as information technology (IT, up 21.2%), finance (up 20.6%), and healthcare (up 20.4%) have shown high-profit growth.
Although EPS is expected to slow down slightly in the July-September period (growth of 5.7%), it is expected to maintain over 10% after the October-December period (growth of 13.5%). In addition, profits are expected to steadily increase in 2024 (up 10.2%) and 2025 (up 15.3%). So far, the main drivers of EPS growth have been technology giants in communication services, IT, and consumer goods, which have benefited from the expansion of demand for artificial intelligence (AI). By 2025, profit growth is expected to be reflected in more industries. Supported by stable growth in corporate performance and interest rate cuts by the Federal Reserve (FRB), the S&P500 index is expected to continue oscillating at a high level around 5600 points.
Last week's financial reports of major semiconductor companies showed that their revenue, earnings per share (EPS) for the May-July period, and income for the August-October period exceeded market expectations, indicating strong demand for artificial intelligence (AI). However, this financial reporting season has raised concerns about the delayed profitability of AI-related investments for multiple tech giants, and we need to be vigilant about whether these investments will be suppressed in the future. The forecasted price-to-earnings ratio (PER, weighted average benchmark) of the S&P500 is 21.5 times, significantly higher than the average level since 2018 (18.7 times), still showing a strong sense of overvaluation. The equal weight prediction PER of S&P500 has risen to 17.4 times, with a gap of about four times between the two, which has narrowed from about five times in early July but continues to expand. The concentration of funds in some stocks benefiting from the expansion of demand for artificial intelligence (AI) has not been fully resolved, and it is still necessary to continue to pay attention to the financial reports and performance prospects of related stocks.