US Tech Giants' Earnings Season Countdown: Can the Nasdaq Hold Its Year-to-Date Gains?

Earnings Season Countdown: Can the Tech Giants Prop Up the Nasdaq's Year-to-Date Gains?

As the second-quarter earnings season for US stocks enters its final countdown, market attention is once again focused on the tech giants—Apple, Nvidia, Tesla, and others. These companies collectively account for over 50% of the Nasdaq 100 index's weight, and their performance will directly determine whether the Nasdaq can hold onto its year-to-date gains. As of press time, the Nasdaq Composite Index has maintained double-digit gains for the year, but recent volatility has intensified, with the market entering a critical phase of balancing high valuations against growth expectations.

Valuation Pressures vs. Growth Expectations: A Race

So far this year, the stock performance of the tech giants has diverged significantly. Nvidia has led the pack, driven by surging demand for AI chips, while Apple has lagged due to weak iPhone sales and an uncertain outlook for the Vision Pro. Tesla has swung between electric vehicle price wars and the commercialization of autonomous driving, resulting in sharp stock price fluctuations. According to FactSet data, the price-to-earnings ratio of the seven giants has exceeded 35 times, significantly higher than the S&P 500's average of 20 times. The market fears that if earnings fail to meet high growth expectations, valuation corrections could drag the Nasdaq down, eroding its gains.

Apple: Can the AI Strategy Become a New Engine?

Apple's upcoming earnings report will test the effectiveness of its AI strategy. Although the company unveiled Apple Intelligence at WWDC, analysts generally believe that the impact of AI features on the iPhone upgrade cycle will not materialize until 2025. According to Bloomberg, Apple's services business revenue growth has slowed to single digits, while hardware revenue faces dual pressures from exchange rates and demand. If the report shows revenue below market expectations, Apple's stock could face a correction risk of over 5%, dragging down the Nasdaq.

Nvidia: Can High Growth Be Sustained?

Nvidia is the fastest-growing among the seven giants, with its data center business revenue doubling year-over-year for three consecutive quarters. However, the market is beginning to worry that as competitors like AMD and Intel launch AI chips, Nvidia's monopoly position may be challenged. According to industry research firm Gartner, the global AI chip market is expected to exceed $70 billion in 2024, but growth will slow from 60% in 2023 to 40%. If Nvidia's earnings report shows revenue growth below 50%, the market may reprice its valuation, triggering Nasdaq volatility.

Tesla: Dual Tests of Profit Margins and Deliveries

The focus of Tesla's earnings report is whether its automotive gross margin can stabilize. In the first quarter of 2024, Tesla's automotive gross margin fell below 18%, lower than the market expectation of 20%. Meanwhile, the company's second-quarter deliveries fell 5% quarter-over-quarter, indicating weak demand. According to Reuters, Tesla's market share in China is being eroded by local brands such as BYD and NIO. If the report shows continued margin declines or delivery guidance falls short, Tesla's stock could break below the $200 mark, weighing on the Nasdaq.

Market Expectations and Nasdaq Trends

Overall, the earnings season for the seven giants will determine the short-term direction of the Nasdaq. If most companies exceed expectations, the Nasdaq could break through previous highs; conversely, if there is a collective miss, the Nasdaq could give back its year-to-date gains. According to a Morgan Stanley research report, current market profit expectations for the seven giants are at historical highs, and any data falling short could trigger a 5%-10% correction. Additionally, the delayed expectations for Federal Reserve rate cuts have increased pressure on high-valuation tech stocks.

Risk Warning

The above content is for reference only and does not constitute investment advice. The stock market carries risks, and investment should be made with caution. The data mentioned in this article comes from public market information, and its accuracy or completeness is not guaranteed. Investors should make independent decisions based on their own risk tolerance.