Wall Street: after the presentation of corporate balance sheets, what’s next for the magnificent seven?

Five of the so-called magnificent seven exceeded expectations in terms of EPS, but, for various reasons, the market reactions to their earnings were mixed, as is the case of Apple and Microsoft, with the exception of Meta, which scored a record on the NYSE. . This makes it difficult for those who want toshine a light on some issue in the profits of big technology companiesbut it turned out healthy for all of those stocks, regardless of how the market is reacting now.

On the other hand, it may not be good news for the market press, as it could signal the end of a convenient and sticky label,”The Magnificent Seven“.

Analysts say we shouldn’t lose sight of the fact that all five of these giant, widely-scrutinized companies made more money in the fourth quarter than analysts projected. That’s obviously a good thing. However, it is not as important as you think if you do not really understand how the stock market works.

This quarter is below average in that “only about 70% of S&P 500 companies are beating expectations, instead of the usual 75%.” Which has led analysts to consider that betting on technology companies, which have already risen a lot, would be leaving themselves very exposed to a possible correction.

Rumors on Wall Street

Some analysts have considered that there appears to be a silent, mutually beneficial agreement between corporations and analysts, where CEOs set low expectations in their guidance, and analysts accept that as gospel and consistently understate earnings as a result. This allows management to under-promise and over-expect, which is always considered a good idea in business.and prevents analysts from being accused of misleading clients by artificially inflating stocks in which their institutions typically have long positions.

In any case, the improvements of the large technology companies in this quarter are surprising. They are difficult because, after a year and a half of rate increases by the Federal Reserve and other Western central banks, and with the Chinese economy hit by a slowly developing housing crisis, this was supposed to be a difficult quarter.

And they are amazing because the last three months have been about a market driven by the gains of some major tech stocksso analysts have been trying to revise upward their estimates for those stocks to reflect that market sentiment

Calling them the Magnificent Seven is fun for financial market commentators, but it’s a bit lazy and misleading. However, it appears that this earnings season will usher in a divergence in performance, perhaps signaling the pending death of the use of the term “Magnificent Seven” as investors and traders focus on each company on its own merits, rather than lumping them all together.