Third-Quarter Earnings Are Going Well—Unless You’re Big Tech
Third-quarter earnings overall beat estimates, with S&P 500 profits up 25% for the third straight quarter. Big Tech companies like Alphabet, Amazon, and Microsoft underperformed, raising concerns about AI investments. The broader market showed resilience, with value stocks outperforming growth. Alphabet and Amazon shares fell after missing revenue expectations. The Magnificent Seven's earnings growth slowed to 29%, while the rest of the S&P 500 grew 33.6%.
How this was made
The 30-second read
Why it matters
The article recaps earnings results already released, offering no new data, thus limited trading value.
Market read
Broad market remains steady while big‑tech faces earnings pressure, prompting sector rotation.
What to watch
Potential upside from cost‑cutting measures and future AI monetization not yet reflected in prices.
Background
Morningstar’s commentary on Q3 earnings season highlights strong overall S&P 500 beats but a slowdown for the Magnificent Seven.
Ticker impact
Alphabet reported slower search revenue growth, leading to its worst day on record.
downward pressure as investors react to revenue miss
Revenue growth missed estimates and a large equity‑portfolio loss depressed earnings.
Microsoft earnings were broadly in line with expectations, causing its shares to fall.
slight decline as market prices in flat earnings
Flat earnings after high expectations lead to modest sell pressure.
Amazon missed revenue estimates, prompting a sell‑off.
downward pressure from revenue miss
Revenue miss signals slower growth, triggering investor disappointment.
Meta took a $10 billion legal charge, hurting earnings.
downward pressure due to large one‑off charge
The legal charge reduces earnings, prompting sell‑side reaction.
Nvidia’s earnings are pending; its expected growth is used in the Mag‑7 aggregate.
neutral until results are released
Article only references expectations, no new data.
Apple is listed among the Magnificent Seven whose earnings growth is slowing.
neutral as no fresh information is disclosed
Article provides no specific Apple news.
Tesla is part of the Magnificent Seven whose earnings growth is lagging the rest of the S&P 500.
neutral pending future data
Only comparative mention, no new Tesla‑specific fact.
Market effects
Tech sector rotation away from AI‑heavy megacaps may benefit broader market.
U.S. large‑cap indices see modest divergence between growth and value.
Global investors monitor the slowdown in big‑tech earnings for risk allocation.
Counterpoint
Some investors may see the earnings slowdown as a buying opportunity if valuations are attractive.
Key entities
- companyAlphabet
Search engine giant with slower revenue growth.
- companyMicrosoft
Cloud and software leader with flat earnings.
- companyAmazon
E‑commerce and cloud provider missing revenue estimates.
- companyMeta Platforms
Social media firm hit by a $10 billion legal charge.
