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Goldman Sachs Observes Shift Among Top Tech Companies After Q1 Results
May 20, 2024 6:54 AM - Parth Sanghvi
Image credit: Jordan Merrick
Goldman Sachs Observes Shift Among Top Tech Companies After Q1 Results
Goldman Sachs has noted a significant shift among the top technology companies, often referred to as the "Magnificent 7," following their first-quarter results. While collectively, these tech giants saw impressive profit growth, individual performances varied, leading to diverse market reactions.
Collective Performance Highlights
- Profit Growth: The combined profits of Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), Meta Platforms Inc (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA) surged by 48% year-over-year.
- Sales Increase: A 14% increase in sales contributed to this growth, along with a margin expansion of 521 basis points, resulting in an aggregate margin of 22.8%.
Varied Fortunes of Individual Companies
While the overall performance of the "Magnificent 7" was strong, the analysis revealed stark differences among individual companies:
- Outperformers: Meta Platforms, Alphabet, and Amazon exceeded expectations with sales growth rates of 27%, 15%, and 13% respectively, driving year-to-date share price increases of 34%, 25%, and 21%.
- Underperformers: Apple witnessed a 4% decline in sales, while Tesla experienced a 9% drop in revenues. Consequently, their stock prices were impacted, with Apple's shares declining by 1% and Tesla's plummeting by 30%.
Changing Dynamics
Goldman Sachs analysts suggested retiring the sobriquet "Magnificent 7" following the varied performances in the first quarter. Tesla's ranking falling to the 12th largest stock in the S&P 500 index exemplifies this shift in market dynamics.
Conclusion
The first-quarter results have highlighted the dynamic nature of the tech industry, with varying performances among top companies. While some continue to excel, others face challenges that impact their market standings. Understanding these nuances is crucial for investors navigating the ever-changing landscape of technology stocks.
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