US companies have outperformed expectations in Q1 earnings season, says Peter Garnry of Saxo
Yesterday, AI super-stock Nvidia reported its latest financial results. As the last of the behemoth companies to do so, it unofficially signaled that earnings season for Q1 of FY 2024 is winding down to a close.
So, how did we do? And what do the performances of those company earnings signify for the markets at large?
An optimistic outlook for corporate
“With over 80% of the S&P 500 companies having reported Q1 earnings, its broad market impact is coming to an end,” agrees Peter Garnry, head strategist and researcher at investment firm Saxo.
According to Garnry, the earnings season has been unexpectedly positive:
The brewing setback in global equities have been halted by what looks like an optimistic outlook from the corporate sector. US companies have surprised both on revenue and earnings (EPS). This conclusion is drawn from various metrics and earnings reports. US companies have outperformed expectations, showing a 1.3% increase in revenue and an 8.7% rise in earnings.”
In particular, Garnry praised Tencent, Baidu, JD.com, and Commerzbank – companies whose earnings he says “further bolster this positive outlook from a global perspective.”
What the earnings sentiment means for the markets
In a time when markets are increasingly worried about a potential US recession brewing, the season’s prognosis from Garnry and other analysts represents some welcome good news.
Typically, times of optimistic earnings seasons that exceed analysts’ expectations mean good tidings for the future. Specifically, it means markets can expect “confidence in continued growth, favourable conditions for investments, potential bullish trends, increased investor confidence, and higher stock prices”, says Garnry.
AI fever continues with latest Nvidia earnings
Specifically, when looking at last night’s Nvidia figures, it is clear that the stock market is unlikely to lose ‘AI fever’ anytime soon – something that has been a significant engine, or diver, of stock growth in general over the last 12 months or more.
Analysts expected the moon from Nvidia’s earnings yesterday, anticipating year-over-year revenue growth that was up 240%, and even earnings per share increases of close to 500%.
And, as has happened before, Nvidia delivered that and more: revenues were up 262%, while EPS was up around a staggering 460%. In fact, the company’s data center revenue alone was also up by a similar amount – more than 400% in the quarter.
With many considering Nvidia the ‘bellwether US stock’ of our time, this likely means good things for the stock market in the near future.
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