It Was a Big Week for Earnings. Who Are the Winners So Far?
Key takeaways
- The big winners of Q1 earnings season so far are major banks, Microsoft and Google
- Regional banks, Tesla and Amazon all left struggling
- Stock markets have remained largely unchanged
Earnings season got off to a bang last week, with a lot of companies doing better than expected. It could be a false sense of security as fears over a recession grow, but investors can rest easy that the stock markets are unfazed right now.
We’ve got the latest on who won big, who lost out and what investor reactions were. Keep reading.
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Who’s out on top of earnings season?
The major banks have done surprisingly well, given the worry around the banking sector’s strength after the collapse of Silicon Valley Bank. JPMorgan led the results with a 52% earnings increase, while Citigroup bumped its profit to $4.6 billion. Wells Fargo saw a 30% rise in net income and Bank of America boosted profits by 15%. All four beat estimates, mostly down to the higher interest rates.
Given the economic climate and mass layoffs underway, Big Tech has been another surprise winner. Microsoft, which has bet big on AI, saw its net income rise 9%, and its sales revenue hit $52.9 billion, up 7%. Its share price rose 9%.
Google also had a better-than-expected Q1: earnings were $1.17 per share against the predicted $1.08 and its cloud computing profit grew 28%. Shares were up 3%. Meta’s stock also jumped 12% after it beat expectations on earnings, revenue and daily active users.
Any losers from the earnings season?
The biggest losers so far were the regional banks. First Republic, an unwilling victim in the banking crisis, reported a 40% drop in earnings and $100 billion in short-term loans from the Fed. Its share price plummeted 20% at the news.
Western Alliance met analyst forecasts but Zions and KeyCorp missed expectations, prompting rumbling among investors that we’re not done with bank failures and a recession.
As for tech, Tesla stock has plunged a total of 18% this week thanks to its lukewarm earnings report, where it missed its gross profit margin forecast and investors lost confidence in Tesla’s pricing strategy.
Amazon actually beat investor estimates but lost its gains after warning of a growth slowdown in its cloud computing department, with April down roughly five percentage points compared to Q1.
The bottom line
There have been some winners and losers this week, but the S&P and Dow Jones have barely shifted in that time. Stocks continue to rally in 2023, but we could see it all come crashing down if a recession is coming.
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