Alphabet and Tesla to Kick Off Earnings Season on July 23
M7 Earnings Expected to Rise 14.1%
Crucial Test for Easing U.S. Stock Market Overvaluation Concerns
As the earnings season for listed companies on the New York Stock Exchange begins, Tesla and Alphabet (Google's parent company), two of the so-called "Magnificent 7" (M7) large-cap tech stocks, will kick off the reporting on July 23 (local time). For the U.S. stock market, which has recently hit record highs, the earnings results of the Magnificent 7 are crucial to dispel concerns about overvaluation. This is why market attention is focused on these companies.
According to the New York Stock Exchange, the big tech companies will begin releasing their latest quarterly earnings starting July 23, with Alphabet, the world’s largest search engine operator, and Tesla, led by CEO Elon Musk, as the first to report. They will be followed by Microsoft (July 30) and Meta (July 30), then Apple (July 31), Amazon (July 31), and Nvidia (August 27).
These big tech companies are regarded as the driving force behind the current record-breaking rally in the U.S. stock market. The S&P 500 index, which is centered on large-cap stocks, closed at 6,309.62 on July 22, up 0.06% after fluctuating throughout the day. Although the increase was modest, the index once again reached an all-time high.
According to market research firm FactSet, the Magnificent 7 are expected to post a 14.1% year-over-year increase in earnings. In contrast, the remaining 493 companies are projected to see a relatively modest earnings growth rate of 3.4%. Notably, Microsoft (3.37%), Alphabet (2.17%), and Nvidia (1.00%) are expected to be among the top six contributors to overall S&P 500 earnings.
For Alphabet, analysts are forecasting net revenue (excluding traffic acquisition costs, TAC) of $79.6 billion (approximately 109 trillion won), an 11.6% increase from $71.3 billion (about 98 trillion won) in the same period last year. Earnings per share are also expected to reach $2.17. This performance is attributed to robust advertising revenue, as well as the combined strength of artificial intelligence (AI) technology and the cloud business.
On the other hand, Tesla, led by CEO Musk, faces concerns over a potential earnings hit due to weak core business performance in Europe and the United States. According to market consensus, Tesla’s second-quarter revenue is expected to decline by 12.3% year-over-year. This follows a 13.5% drop in vehicle deliveries (vehicle sales) during the same period, as previously disclosed. This decline is even steeper than the 13% drop in the first quarter and represents the worst sales performance in Tesla’s history.
The earnings announcements from the Magnificent 7 are seen as a critical turning point that could overturn the current debate over U.S. stock market overvaluation. According to The Wall Street Journal (WSJ), as of July 18, the price-to-earnings (P/E) ratios for the S&P 500 and Dow Jones Industrial Average were 24.72 and 24.79, respectively. The Nasdaq 100, which is primarily composed of venture companies, had an even higher P/E ratio of 32.55.
Barron’s, a capital markets-focused media outlet, noted that as the second-quarter earnings season gets into full swing, "market valuations remain historically elevated and are highly dependent on the performance of tech stocks," adding that "some investors have started to adopt a more cautious outlook."
The shift toward caution among investors is due to a combination of factors: the Federal Reserve’s stance of maintaining its benchmark interest rate and the risks associated with tariff wars. U.S. President Donald Trump has publicly criticized Federal Reserve Chair Jerome Powell, urging the Fed to cut rates. On this day, President Trump also announced plans to sign trade agreements with three countries?Japan, following the Philippines and Indonesia.
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