Are the “Magnificent 7” the Top Contributors to Earnings Growth for the S&P 500 for Q1

A number of the companies in the "Magnificent 7" saw their stock prices increase during the first quarter, which helped to drive the value of the S&P 500 higher during this period. Are companies in the "Magnificent 7" also expected to drive earnings higher for the S&P 500 for the first quarter?

The answer is yes. Five of the seven companies in the "Magnificent 7" are projected to be the top five contributors to year-over-year earnings growth for the S&P 500 for Q1 2024. These five companies (in order of highest to lowest contribution) are NVIDIA, Amazon.com, Meta Platforms, Alphabet, and Microsoft.

In aggregate, these five "Magnificent 7" companies are expected to report year-over-year earnings growth of 64.3% for the first quarter. Excluding these five companies, the blended (combines actual and estimated results) earnings decline for the remaining 495 companies in the S&P 500 would be -6.0% for Q1 2024. Overall, the blended earnings growth rate for the entire S&P 500 for Q1 2024 is 0.5%.

Three of these five companies are scheduled to report actual results for Q1 this week: Meta Platforms, Microsoft, and Alphabet.

Analysts predict these five companies in aggregate will report year-over-year earnings growth of more than 15% for the remaining three quarters of 2024. However, it is interesting to note that analysts believe the other 495 companies in the index will see improving year-over-year earnings growth during the course of 2024. By Q4 2024, analysts expect the other 495 companies in the S&P 500 to report double-digit (year-over-year) earnings growth as well.

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