Yahoo Finance Should You Buy the Dip in Magnificent 7 ETFs Before Q1 Earnings?
Amid the delayed prospect of rate cuts and an increase in geopolitical tension, the technology sector has been seeing brutal trading in recent weeks after a strong first quarter. Notably, the Magnificent Seven stocks suffered the worst-ever weekly loss in terms of market capitalization, erasing $950 billion last week.
Nvidia NVDA, which has been leading the artificial intelligence boom, shed almost $300 billion and became the biggest market-cap loser. Shares of Nvidia fell 13.6% last week and are down sharply, about 22% from its March high, indicating that it is in bear market territory. Meanwhile, Tesla TSLA witnessed the biggest decline percentage among the Magnificent Seven as its market cap fell by $76 billion. The electric car maker posted the worst quarterly performance since the fourth quarter of 2022 and continued its slump in the second quarter as well.
Apple AAPL and Microsoft MSFT lost $178 billion and $169 billion, respectively, in market cap. Amazon AMZN shed $118 billion in market value while Meta Platforms META and Alphabet (GOOGL, GOOG) erased a respective $68 billion and $41 billion from their valuation.
However, first-quarter earnings are expected to drive the whole group higher. Overall, first-quarter earnings for "Magnificent Seven" are expected to grow 33% from the same period last year on 12.7% higher revenues. This would follow the 51.2% earnings growth for the group in the fourth quarter on 15% higher revenues.
Profits for the "Magnificent Seven" are expected to rise 38% in the first quarter from a year ago, dwarfing the overall S&P 500's 2.4% year-over-year earnings growth, according to Bloomberg Intelligence data (see: all the Technology ETFs here).
Among the group of companies, Tesla is set to report first on Apr 23, followed by Meta Platforms on Apr 24. Microsoft and Alphabet are expected to release their results on Apr 25. Amazon, Apple and Nvidia are expected to come up with earnings on Apr 30, May 2 and May 22, respectively.
Tesla
Tesla has an Earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The electric carmaker saw a negative earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. The Zacks Consensus Estimate for the first quarter indicates a substantial year-over-year earnings decline of 45.9% and revenue decline of 5%. The earnings track record of the company is not impressive. It delivered a four-quarter negative average earnings surprise of 0.40%. Tesla falls under a bottom-ranked Zacks industry (bottom 32%). The electric carmaker is down 29.6% in the last three months (read: Tesla Stock Sinks After a Big Q1 Delivery Miss: ETFs in Focus).
Meta Platforms
Meta Platforms has an Earnings ESP of +0.62% and Zacks Rank #2. The social media giant saw a positive earnings estimate revision of a penny for the to-be-reported quarter over the past 30 days. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The current Zacks Consensus Estimate for the yet-to-be-reported quarter indicates substantial year-over-year earnings growth of 63.6%. Revenues are expected to increase 26.6%. Meta Platforms delivered an earnings surprise of 19.71%, on average, in the last four quarters. The stock belongs to a top-ranked Zacks industry (top 22%). Shares of META have surged about 22% over the past three months.
Microsoft
Microsoft has an Earnings ESP of -3.36% and a Zacks Rank #3. Microsoft saw a negative earnings estimate revision of 3 cents over the past 30 days for the to-be-reported quarter. Its earnings track record is impressive, with the four-quarter earnings surprise being 8.82%, on average. The Zacks Consensus Estimate indicates earnings growth of 14.69% and modest revenue growth of 14.7% from the year-ago quarter. Microsoft belongs to a top-ranked Zacks industry (top 34%) and has gained 0.6% over the past three months (read: 5 ETFs Leading the Tech Rebound: Will the Rally Continue?).
Alphabet
Alphabet has an Earnings ESP of +1.43% and Zacks Rank #3. It saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. The company’s earnings surprise track record over the past four quarters is good, with the earnings surprise being 7.22%, on average. Earnings are expected to increase 27.35%, while revenues are expected to grow 13.7% from the year-ago quarter. The Internet behemoth falls under a top-ranked Zacks industry (top 18%) and has climbed 5.5% in the last three months.
Amazon
Amazon has an Earnings ESP of +11.66% and a Zacks Rank #3. The stock saw a positive earnings estimate revision of a penny over the past seven days for the first quarter. The Zacks Consensus Estimate indicates a whopping year-over-year earnings increase of 164.5% and substantial revenue growth of 11.9% for the to-be-reported quarter. Additionally, Amazon’s earnings surprise history is impressive, with the four-quarter average surprise being 51.04%. The stock falls under a top-ranked Zacks industry (top 18%) and has returned about 13% in the past three months.
Apple
Apple has an Earnings ESP of 0.00% and a Zacks Rank #3. Apple saw no earnings estimate revision over the past 30 days for the fiscal first quarter. The iPhone maker has a strong track record of positive earnings surprise. It delivered an average earnings surprise of 5.20% in the trailing four quarters. The Zacks Consensus Estimate indicates a modest year-over-year decline of 1.3% for earnings and 5.3% for revenues. Apple belongs to a bottom-ranked Zacks Industry (bottom 3%). The stock is down 14.9% over the past three months.
Nvidia
Nvidia currently has an Earnings ESP of +1.68% and a Zacks Rank #1. This videogame-gear specialist saw a positive earnings estimate revision of a penny over the past seven days for the first quarter of fiscal 2025. Nvidia’s earnings surprise history is good, as it delivered an earnings surprise of 20.18%, on average, in the last four quarters. Nvidia is expected to post earnings and revenue growth of 403.7% and 236%, respectively, for the to-be-reported quarter. The stock belongs to a bottom-ranked Zacks Industry (bottom 32%) and has soared about 28% in the past three months.
ETFs to Tap
Given this, investors may want to play these stocks with the help of ETFs. Below, we have highlighted some ETFs having the largest exposure to Magnificent Seven.
Roundhill Magnificent Seven ETF (MAGS)
Roundhill Magnificent Seven ETF is the first-ever ETF offering investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $209.2 million in its asset base and charges 29 bps in fees per year. MAGS trades in average daily volume of 185,000 shares (read: Magnificent Seven ETF Hits New 52-Week High).
MicroSectors FANG+ ETN (FNGS)
This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of these seven stocks. MicroSectors FANG+ ETN has accumulated $252.6 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 144,000 shares a day on average and has a Zacks ETF Rank #3.
Vanguard Mega Cap Growth ETF (MGK)
Vanguard Mega Cap Growth ETF tracks the CRSP US Mega Cap Growth Index. It holds 79 securities in its basket, with the Magnificent Seven collectively accounting for 56.9% of the total assets. Vanguard Mega Cap Growth ETF charges 7 bps in annual fees and trades in a good volume of around 307,000 shares a day on average. The fund has AUM of $18.4 billion and a Zacks ETF Rank #2 (read: 5 Defensive Investment ETF Strategies for Your Portfolio).
Invesco S&P 500 Top 50 ETF (XLG)
Invesco S&P 500 Top 50 ETF follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. It holds 55 stocks in its basket, and Magnificent Seven accounts for a combined 50.4% share. Invesco S&P 500 Top 50 ETF has been able to manage assets worth $4 billion but trades in a good volume of about 1 million shares a day on average. XLG charges 20 bps in annual fees and has a Zacks ETF Rank #3.
iShares S&P 100 ETF (OEF)
iShares S&P 100 ETF offers exposure to 101 largest U.S. companies. Magnificent Seven accounts for a combined 42.1% share. iShares S&P 100 ETF has amassed $11.3 billion in its asset base and charges 20 bps in annual fees. It trades in average daily volume of 230,000 shares and has a Zacks ETF Rank #3.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Invesco S&P 500 Top 50 ETF (XLG): ETF Research Reports
Vanguard Mega Cap Growth ETF (MGK): ETF Research Reports
iShares S&P 100 ETF (OEF): ETF Research Reports
Roundhill Magnificent Seven ETF (MAGS): ETF Research Reports
MicroSectors FANG+ ETN (FNGS): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
