The Magnificent Seven Stocks: What to Expect During Earnings Season

Movie buffs would know “The Magnificent Seven” as a 1960 cult classic Western film. But if you’ve been keeping an eye on the red-hot tech sector, you’d also know the Magnificent Seven stocks as seven of the most-watched U.S. stocks that have come to dominate corporate earnings news cycles of late.  

Coined by Bank of America analyst Michael Hartnett, the term represents a group of company stocks – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla – that have grown into global giants and industry leaders.  

Among the most important tech stocks, the Magnificent Seven are effective leading indicators of the tech sector’s performance on the whole. And due to their exceedingly large market capitalisations, these stocks are also major drivers of the S&P 500, the most widely referenced benchmark for the U.S. stock market.  

Given their outsized influence on the stock market, it’s not surprising that earnings reports from the Magnificent Seven are widely followed – not least for the potentially rewarding trading opportunities these events represent.  

To that end, let’s take a closer look at the Magnificent Seven stocks and what to expect in their latest earnings round. We’ll also discuss helpful tips when trading these popular stocks.  

Key Points 

• The Magnificent Seven stocks majorly influence the S&P 500 and reflect the overall health of the tech sector. 

• The Magnificent Seven stocks, especially Nvidia, have demonstrated significant growth, highlighting their robust market performance. 

• These stocks’ continued leadership in the tech sector is driven by adaptability, financial stability, and strong market presence. 

Understanding the Magnificent Seven Stocks 

Historical Performance 

That the Magnificent Seven stocks are some of the largest stock market winners today is no exaggeration. Here’s how these seven stocks have performed over the past 1- and 5-years duration (as at June 2024). 

Stock	1-year returns	5-year returns
Apple Inc. (AAPL)	33.39%	274.34%
Amazon Inc. (AMZN)	45.95%	109.74%
Alphabet Inc. (GOOG)	19.25%	157.50%
Meta Platforms Inc. (META)	79.51%	200.01%
Microsoft Corp. (MSFT)	28.93%	201.71%
Nvidia Corp. (NVDA)	224.75%	2629.25%
Tesla Inc. (TSLA)	0.74%	876.67%

As shown, these stocks have turned in impressive performances over the past five years, growing by at least 100%. The outlier here is, of course, NVDA, which shot up a breathtaking of more than 2629% (26x).

And considering that these lucrative returns were achieved amidst the widespread disruption of the Covid-19 pandemic, nothing much further really needs to be said about the pedigree of the aptly-named Magnificent Seven stocks. 

Impact of the Magnificent Seven stocks on the S&P 500 ^[2,3,4] 

While only seven in number, the Magnificent Seven nonetheless have an outsized impact on the S&P 500. In 2023, these seven stocks contributed an eyebrow-raising 70% of the S&P 500’s gains.  

That year, the group of tech stocks collectively climbed 75.71%, compared to the 24.23% managed by the S&P 500. 

These aren’t just fluke numbers. The Magnificent Seven have continued to increase their weightage in the S&P 500 over the past 10 years. This shows that these stocks have been an instrumental driving force in the growth of the stock market. 

Crucially, the searing performance of the Magnificent Seven is set to continue. From 2023 to 2025, Goldman sees the seven stocks growing at a compound annual growth rate of 11%. This is compared to just 3% for the rest of the S&P 500. 

Reasons behind the success of the Magnificent Seven 

What drives stock prices is the performance of the companies behind them. The Magnificent Seven stocks are issued by highly successful companies with a long and proven history. Even the youngest companies in the group – Tesla and Meta – have been around for about 20 years.  

In essence, the factors behind the success of the Magnificent Seven, and why they are likely to continue to dominate, can be boiled down to the following: 

• Adaptability: Each of the seven companies have managed to keep up with changing market conditions, consumer behaviour and technological advances. This is driven by continued efforts in research and development.  

• Financial health: Short-term hiccups notwithstanding, the Magnificent 7 have all displayed strong financial health, robust earnings, revenue growth, and healthy balance sheets. These strong fundamentals make them attractive in the eyes of growth investors. 

• Global presence: All seven companies are household names known around the world. They are well positioned to tap into diverse markets and benefit from international growth. 

• Strong market position: The Magnificent Seven have established dominant positions in their respective markets, with many being global giants. This is a powerful competitive edge not easily overcome by competitors.  

• Worldwide brand recognition: Another advantage is the extensive brand recognition enjoyed by the Magnificent Seven companies. Being a well known brand fosters consistent revenue streams while facilitating the introduction of new products and services.  

Performance Analysis of the Magnificent Seven Stocks 

Now that you understand the characteristics of the Magnificent Seven stocks, and the potential they possess, it’s time to evaluate each of the seven companies individually.  

Apple Inc (AAPL) ^[5] 

Next earnings release date: 31 October 2024 (after market closes)

Apple may be best known for its iconic iPhone and personal electronics lineup, but under Tim Cook’s leadership, the company has also built up a robust services segment. This includes the App Store, iCloud data storage and advertising businesses, segments where their higher margins have been credited with picking up the slack due to slowing sales of its flagship iPhone product.  

On September 9, Apple introduced its iPhone 16 lineup, along with new models of the Apple Watch and AirPods. With this earnings release, the company faces a key test. Since there were no price increases for the latest iPhones, Apple will depend on higher demand to drive revenue growth. The company is banking on its new AI-powered iPhone to generate significant interest and initiate a hardware upgrade cycle.

The company is scheduled to release its latest earnings report on 31 October 2024. Based on 34  analyst reports in the last three months, the average 12-month price target is $248.34, with a 7.62% change from the current price of $230.76 on the 24 October. Analysts sentiment is largely positive, with 23 analysts signalling “Buy”, 10 “Hold” and only 1 advising to “Sell”.

In addition, Earnings-per-Share (EPS) is expected to come in at USD$1.59, slightly higher than last year’s USD$1.40 EPS in the same quarter. Over the past 12 months, Apple has exceeded its EPS estimates 100% of the time, significantly outperforming its industry, which beat EPS estimates only 66.84% of the time.

Amazon (AMZN) ^[6] 

Next earnings release date: 31 October 2024 (after market closes)

Amazon’s robust performance from 2023 sees no signs of slowing down, driven in part by strong earnings from its Amazon Web Services segment in the thriving cloud and data management sector. Having surpassed EPS estimates by 23.76% previously, Amazon is poised to maintain its momentum.

Wall Street shares this optimism, with all 46 analysts issuing “Buy” recommendations and only 2 recommending “Hold.” Encouragingly, the 12-month price target for the stock is set at USD 265, representing a notable increase of 21.36% over the current share price.

For the earnings report, scheduled for 31 October 2024, EPS is USD$1.14, with a projected range between USD$0.94 and USD$1.26. Over the past 12 months, Amazon has consistently exceeded its EPS estimates 100% of the time, significantly outperforming its industry, which achieved an EPS beat rate of only 59.25%. Historically, Amazon’s revenues tend to strengthen throughout the year, peaking in the fourth quarter due to the year-end holiday season, and this year is expected to follow a similar pattern.

Alphabet (GOOG) ^[7] 

Next earnings release date: 29 October 2024 (after market closes)

Another “Magnificent Seven” stock with strong recommendations from analysts is GOOG. Ahead of its next earnings release on 29 October, analysts have set a 12-month stock price forecast of USD$206.57, indicating a 25.59% upside. This average price target is based on ratings from eight analysts, the majority of whom issued a “Buy” recommendation, with only one analyst recommending “Hold.”

Alphabet exceeded analysts’ expectations in the previous quarter, delivering an EPS of USD$1.89, surpassing the forecasted USD$1.84 by 2.54%. Over the past 12 months, Alphabet has consistently exceeded its EPS estimates 100% of the time, outperforming its industry, which managed to beat estimates only 55.69% of the time. Analysts are now forecasting an EPS of USD$1.84 for the upcoming quarter, with a projected range between USD$1.64 and USD$1.98. Based on past performance, analysts are optimistic about a repeat earnings beat this quarter.

Alphabet’s growth potential is not only anchored in its strong advertising business but also in the rapid expansion of its Google Cloud segment. In recent quarters, Google Cloud has outpaced advertising growth, contributing significantly to revenue with a 28.8% year-over-year increase in Q2 2024. 

As cloud computing and artificial intelligence continue to grow, Google Cloud is well-positioned to capture more market share, further boosting Alphabet’s overall performance. Additionally, the company’s rising profit margins—driven by higher net income growth compared to revenue growth—highlight its growing efficiency.

Meta (META) ^[8] 

Next earnings release date: 30 October 2024 (after market closes)

After a strong performance in 2023, Meta’s momentum seems to be holding strong. Ahead of Its next earnings report on 30 October, Wall Street analysts are upbeat, with 42 out of 47 analysts putting in “Buy” recommendations for the stock. The remaining five analysts were split between 4 “Hold” and 1 “Sell”.

On average, analysts expect the 12-month price forecast of META to reach USD$811, suggesting a 11.23% upside from the current price. This moderate expectation could be due to the strong rally seen by the stock in 2023, which has pushed the stock to all-time highs.

In terms of EPS, analysts are forecasting a reading of USD$5.21 for the upcoming quarter, with an estimated range between USD$4.54 and USD$5.80. This is slightly higher than the previous quarter’s actual EPS of USD$5.16. Over the past 12 months, META has consistently exceeded its EPS estimates 100% of the time, outperforming its industry, which achieved an EPS beat rate of only 55.68%. 

Meta’s advertising business continues to drive its growth, with sales increasing by 22% in Q2 2024—double the growth rate of its competitor Google. This trend is expected to persist into Q3, with Meta’s ad revenue projected to rise by 17.1% versus Google’s 9.7%. Analysts attribute Meta’s success to its strategic investments in AI, which have bolstered its market share and helped optimise ad efficiency.

Investors will be closely watching for updates on Q4 revenue forecasts and insights on AI investment returns in the upcoming earnings report.

Microsoft (MSFT) ^[9] 

Next earnings release date: 30 October 2024 (after market closes)

Microsoft’s most well-known product is Windows OS, but this business segment only makes up around 10% of the technology giant’s revenue stream. Rather, the company’s main revenue streams are its Azure cloud services (38%) and Office software suite (23%), with gaming and other services making up the remainder. 

One potential area of growth is AI, with analysts expecting increased demand for Azure, which is set to incorporate AI to greater degrees. Microsoft’s multi-billion investment into OpenAI is also expected to bear fruit in the burgeoning AI war. 

Analysts are upbeat on the stock, with an average 12-month price forecast of USD$503.27 an upside of 18.53%. This was collated in the past three months across 29 ratings, of which 26 entered a “Buy” recommendation, and three “Hold”.

In terms of earnings, analysts are forecasting Microsoft’s EPS to reach USD$3.10 for the upcoming quarter, slightly above the previous quarter’s EPS of USD$2.95. Microsoft has consistently exceeded EPS estimates over the past 12 months, outperforming its industry, which achieved a 66.94% EPS beat rate during the same period.

Nvidia (NVDA) ^[10] 

Next earnings release date: 19 November 2024 (after market closes)

Out of the Magnificent Seven stocks, Nvidia stands heads and shoulders above the rest, mounting a once-a–lifetime stock price bull rally right into the investing public’s consciousness. 

After such a hot streak, the question naturally becomes: where is the stock headed next? Well, it appears that NVDA still has some more room for growth – to the tune of 19.31% upside over the next 12 months, putting the stock price target at USD$200. This was the average forecast from 42 analysts, with 39 “Buy” ratings and 3 “Hold”. 

In terms of earnings, analysts are expecting Nvidia’s EPS to reach USD$0.74 for the upcoming quarter, with a projected range between USD$0.71 and USD$0.82. This marks a steady increase from the previous quarter’s EPS of USD$0.68. Over the past 12 months, Nvidia has consistently exceeded EPS estimates 100% of the time, outperforming its industry average of 66.80%. 

Nvidia’s growth prospects are further boosted by surging demand for its GPUs and data centre services amid the AI boom. The forthcoming launch of its Blackwell GPUs has drawn significant interest from major tech players like Microsoft, Meta, and Amazon, all of whom are increasing their AI investments. 

Nvidia’s CEO described demand as “insane,” with billions in projected Q4 revenue from Blackwell alone. Despite facing rising competition, Nvidia’s continuous innovation and established leadership in AI are expected to sustain its momentum.

Tesla (TSLA) ^[11] 

Next earnings release date: 23 October 2024 (after market closes)  

While the six preceding stocks have all had attracted positive forecasts, Tesla bucks the trend. 

Analysts have a cautious outlook on Tesla’s near-term prospects, with an average 12-month price target of USD$207.83. Stock recommendations are varied, with 35 analysts offering a mix of ratings: 11 “Buy,” 16 “Hold,” and 8 “Sell.” The wide range of forecasts reflects differing views on the stock’s future performance.

Despite recent challenges, analysts are forecasting Tesla’s EPS to reach USD$0.59 for the upcoming quarter, marking an improvement from the previous quarter’s EPS of USD$0.52. However, this estimate remains lower compared to the USD$0.91 EPS reported during the same quarter last year.

Potential Impact of Global Economic Factors on Magnificent Seven Stock Prices 

Global Macroeconomic Recovery  

The global scale of business conducted by the Magnificent Seven stocks means they would be impacted by economic events taking place in other countries other than the U.S. As of the time of writing, one of the largest risks is slow global economic recovery, especially in key markets such as China.  

As discussed above, Tesla is already facing troubles in China. But it may not be the only one.  

Apple is also reliant on the Chinese market for revenue growth. The first six weeks of the year saw a 24% decline in iPhone sales in China, compared to the same period last year ^[12]. The decline was due to higher-than-usual shipments by Apple at the start of 2023, but increased competition from local brands such as Huawei was also a contributing factor, according to analysts. 

The challenges faced by Apple and Tesla in China are taking place amidst a backdrop of slowing economic growth. While the Chinese authorities are confident of achieving 5% GDP growth in 2024, this marks a further step down in a declining trend that has already lasted several years ^[13].  

The rest of the world isn’t looking too good either. According to World Bank data, the global economic outlook remains muted compared to historical standards. In 2024-25, growth is set to underperform its 2010s average in nearly 60 percent of economies, comprising over 80 percent of the global population ^[14]. Continued sluggish global recovery is likely to throttle corporate earnings and temper Magnificent Seven stock prices over time.  

U.S. Interest Rate Policy  

The U.S. Federal Reserve Board has confirmed that interest rate adjustments won’t be taking place until September ^[15]. With the market widely expecting rate to be cut (instead of unchanged or increases), September could see Magnificent Seven stocks gaining an uplift.  

Firstly, the Fed cutting rates will be taken as official confirmation that inflation has been tamed, lifting investors sentiment and potentially heralding a new wave of funds entering the equities market. This increased demand could increase upwards pressure on Magnificent Seven stock prices.  

Secondly, interest rate cuts could see the U.S. Dollar weakening, which means U.S. goods and products become more affordable overseas. This, again, could benefit Magnificent Seven stock prices by way of increased sales and higher revenue ^[16]. 

Strategies for Trading CFDs on Magnificent Seven Stocks 

The near-term price action of Magnificent Seven stocks could present investors with potentially lucrative trading opportunities. For those who prefer to trade these stocks without having to take direct ownership of shares, Vantage Contracts-for-Difference (CFDs) might be the ideal trading instrument. 

CFDs are agreements to exchange the difference in stock price at the time of the close of the contract. They are highly flexible, allowing you to take long or short positions, and because there is no time limit, trades may last as long (or short) as your strategy calls for.  

Here are some strategies to consider when trading Magnificent Seven stocks with CFDs. 

Maintain Control Over Entries and Exits 

Earnings reports can cause volatility in the markets upon their release, especially if results do not align with investor expectations or market sentiment. This means that earning releases offers higher-than-usual potential for trading wins, but the same is also true for losses as well.  

For this reason, it might be more prudent to avoid trading at or around earnings releases, so as to avoid volatility spikes that could throw off your entire trade.  

Even during uneventful periods, CFD trading should be approached with control over entry and exit points. One way to accomplish this is by setting buy limit orders at predetermined prices; this will allow you to open a long position when the stock price falls to/below your target. 

By the same token, use stop-losses to exit your trade once the trigger price is reached. This will tamp down the temptation to stay overlong in a losing position.  

Confirm Analysts Forecasts with Technical Indicators 

Nobody, not even Warren Buffet, can predict stock prices, so it is simply good sense to take analysts’ forecasts with a pinch of salt. But that doesn’t mean you should ignore them either.  

Rather, you can use technical indicators to help confirm or deny forecasts. For instance, you can plot the average 12-month stock price for the Magnificent Seven stock you want to trade, and compare using price trends (lines of support and resistance) in real time. If you see an increasing divergence, you may want to adjust the forecast up or down in tandem.  

Crucially, technical indicators can also be powerful trading tools in determining realistic stock prices. This will allow you to set more accurate boundaries of your trade to control risk and potentially minimise losses or maximise profits.  

Keep an Eye on Market News and Earnings Guidance 

Analysts forecasts are just one source of information for traders. Another important source is the company itself.  

Companies commonly issue earnings guidance, which is an informal report or statement detailing the earnings they expect to achieve. Also known as forward-earnings guidance, they are based on internal projections for revenue, earnings, and capital spending and are subject to revision ^[17].  

This is done so as to avoid overvaluation and stock price volatility, especially around earnings release dates.  

Earnings guidance from a Magnificent Seven stock are often highly respected, as they are essentially the company’s own best estimates to shareholders. It is important to compare earnings guidance with inverter forecasts, and any major discrepancies should be investigated to uncover important events or developments.  

Explore our detailed article on news trading, featuring an analysis of the ‘Buy the Rumour, Sell the News’ strategy. Discover how this approach can be applied during the releases of company earnings reports. 

Conclusion: Trade Magnificent Seven Stocks with Vantage 

Enjoy low fees, transparent pricing and tight spreads with Vantage CFDs. Trade your favourite Magnificent Seven stock or choose from thousands of other popular equities across global markets.  

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