"The current earnings season has underscored the enduring strength of the
big technology sector
, allaying investor fears that the
AI
enthusiasm would wane after driving the market rally in 2023.
The ‘
Magnificent Seven
’ group of tech giants, including
Nvidia
Corp., Meta Platforms Inc., Microsoft Corp., and Amazon.com Inc., witnessed an impressive 55% increase in average earnings per share during the fourth quarter compared to the previous year, as reported by Bloomberg.
This robust performance significantly contributed to the Nasdaq 100 index reaching an all-time high and achieving its fourth consecutive monthly gain.
According to the Bloomberg report, Ken Mahoney, the president and CEO of Mahoney Asset Management, emphasized the growing recognition of AI’s importance, predicting that it will remain a central topic of discussion for the next few years. The technological advancements have made value stocks seem rather mundane in comparison.
Before the season began, Wall Street projected a modest 1.2% growth in fourth-quarter 2023 earnings per share. However, as of Friday, with nearly 93% of companies reporting, the actual growth stands at an impressive 7.7%, according to Bloomberg data.
Tech sector continues to be favourite
Investors in the tech sector reportedly continue to view the largest companies as both safe havens and growth assets. These firms boast strong balance sheets and cash flows, enabling them to navigate macroeconomic uncertainties and higher interest rates. Notably, Meta’s recent announcement of $50 billion in stock buybacks and its inaugural dividend caused quite a stir.
Ken Mahoney aptly described it as a ‘microphone drop’ moment. When a company can repurchase $50 billion worth of its own stock, it’s nothing short of remarkable."
Furthermore, the AI dominance exhibited by companies like Nvidia has further bolstered investor confidence. Nvidia’s outstanding earnings report last week not only boosted the entire market but also highlighted that its earnings growth outpaced the stock price, resulting in the largest single-session increase in market value ever seen on Thursday."
English (US) ·