Companies have generally managed to perform well against the consensus of earnings forecasts. In Q1, about 77% of S&P 500 firms are considered earnings outperformers. This rate surpasses the typical figure of 74% observed in the early months of the year, indicating a positive trend outstripping historical norms.
Steering into AI’s Orbit
The prevailing theme underlying this quarter’s earnings reporting is the spotlight on artificial intelligence (AI). Firms have recorded a surge in spending on this cutting-edge technology. It comes as no surprise that AI-focused and related stocks have emerged as the shining stars among the earnings outperformers.
Despite a decreasing number of companies revealing their earnings as the season nears a close, there are still some significant players set to provide updates on their Q1 financial performance. Among them are heavyweights that could sway the market with their results, promising a strong finish even in the face of an already robust market.
NVIDIA (NVDA)
AI has taken center stage this earnings season, yet the top performer in this space is yet to report. Nvidia (NASDAQ:NVDA), a consistent AI earnings outperformer, is gearing up to announce its earnings on May 22. Expectations are high as investors ponder whether its astronomical growth trajectory will persist and what future insights the company will unveil.
Other AI players have conveyed optimistic sentiments, with Meta Platforms (NASDAQ:META) significantly upping its orders of Nvidia’s H100 chips for AI workloads. Tesla (NASDAQ:TSLA) also eyes nearly a twofold increase in its utilization of H100 chips in 2024 as it progresses towards launching fully autonomous vehicles.
Analyst forecasts indicate a deceleration in Nvidia’s revenue growth from its previous meteoric pace. Nonetheless, projections suggest a celestial upsurge, with anticipated EPS growth of 34% to reach $7.64. Nvidia boasts a track record of consistently exceeding estimates since the AI boom, typically followed by a surge in its stock price. Will the company extend its streak of surpassing earnings expectations by over $0.50 for the fourth consecutive quarter, solidifying its status as an earnings outperformer?
Apogee Therapeutics (APGE)
Relative newcomer in the pharmaceutical realm, Apogee Therapeutics (NASDAQ:APGE), witnessed a staggering 95% surge in its stock price following its recent stint as an earnings outperformer. The favorable results were coupled with promising data on one of its experimental candidates for chronic obstructive pulmonary disease and Atopic Dermatitis.
The Atopic Dermatitis candidate closed successful Phase 1 trials shortly before the earnings update. Post-earnings, the company capitalized on the stock surge, initiating the sale of $420 million in shares. Although its stock price has slightly retreated since, Apogee Therapeutics is poised to unveil more financial insights and pipeline details during its upcoming earnings release in early June.
JD.com (JD)
Concerns regarding China’s economic rebound had investors on edge earlier this year, leading to a plummet in the share prices of Chinese tech player JD.com (NASDAQ:JD) and its peers.
However, the higher-than-expected Q1 GDP growth in China sparked a recovery among Chinese tech stocks, with some still on the mend. JD.com currently trades at a notably modest price-to-earnings (P/E) ratio of 15.15, presenting a stark contrast to its U.S. counterpart, Amazon (NASDAQ:AMZN), which boasts a P/E ratio of 52.
JD.com is slated to divulge its Q1 earnings on May 16. Analysts project earnings of $0.65 per share, slightly below the previous year’s reported $0.66. Yet, with a stellar track record of surpassing analyst estimates and securing the status of an earnings outperformer, JD.com remains a strong prospect for investors.
