S&P 500 earnings to put investor focus on tech, AI
Tech and communication services sectors forecast strongest growth
Investors hope earnings justify high stock prices
Concerns over consumer health and impact of oil prices
Technology sector earnings in aggregate expected up 15.4% from year-ago quarter
By Caroline Valetkevitch
NEW YORK, Oct 10 (Reuters) - Investors will be looking for evidence that investment in artificial intelligence among S&P 500 companies is beginning to pay off as the reporting season progresses, despite the fact that analysts expect profit growth to decelerate from the previous quarter.
S&P 500 earnings are estimated to have increased 5.3% over the year-ago quarter, down from a second-quarter gain of 13.2%, but technology .SPLRCT and communication services .SPLRCL sectors are forecast to have the strongest year-over-year growth, according to LSEG data as of Friday.
The earnings period unofficially kicks off this week, with reports from major financial firms including JPMorgan Chase JPM.N and Wells Fargo WFC.N due Friday.
AI-related companies have dominated earnings since last year, and optimism over AI plans have helped to drive strong gains in the market. The S&P 500 .SPX is at record high levels and up roughly 21% for the year so far, with tech and communication services leading sector gains since Dec. 31.
"Many analysts will start looking at how and if a lot of these larger companies can monetize the model that they're training, and we've seen the ones that have been able to do so have been rewarded quite well," said Howard Chan, chief executive officer of Kurv Investment Management in San Francisco.
Technology sector earnings in aggregateare expected to have gained 15.4% from the year-ago quarter, while communication services earnings are seen up 12.3%, based on LSEG data.
Shares of Meta Platforms META.O jumped on Aug. 1, a day after it issued an upbeat sales forecast for the third quarter, signaling that digital-ad spending on its social media platforms can cover the cost of its AI investments.
"Companies like Microsoft MSFT.O and Google GOOGL.O, they're spending quite a bit, but it's a little bit less understood... how that will interplay with their existing businesses," Chan said.
Investors may also be hoping earnings can justify higher stock prices. With the S&P 500 at record high levels, the index is now trading at 22.3 times future 12-month earnings estimates, well above its long-term average of 15.7, according to LSEG Datastream.
Solita Marcelli, chief investment officer for Americas at UBS Global Wealth Management, wrote in a note Wednesday that third-quarter results could provide a catalyst for gains as investors focus ontech fundamentals and AI.
"We continue to favor the semiconductor space and megacaps for AI exposure," she wrote, noting that she expects tech and AI companies to beat results for the quarter ended in September and also raise their outlooks.
UBS expects overall AI semiconductor industry revenues to grow sharply, and reach $168 billion by the end of this year, according to the note.
Earnings growth in most S&P 500 sectors is seen lower than the previous quarter.
Investors had been worried the economy may have been getting too weak. The Federal Reserve last month kicked off a monetary easing cycle by cutting its benchmark interest rate by an unusually large 50 basis points, the first reduction in borrowing costs since 2020, amid signs the labor market was weakening.
Those concerns eased a bit with last week's monthly U.S. jobs data, which showed that U.S. job gains increased in September by the most in six months, and that unemployment rate fell to 4.1%.
Still, company comments about consumer health will be scrutinized. "Lower front-end rates are more helpful to consumers than companies... So the Fed policy is more something that consumer-driven companies could benefit from," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
At the same time, some strategists said, investors may be eager to hear from companies about what the recent surge in oil prices might mean for businesses. Oil prices have gained as Middle East tensions have escalated.
Earnings for the energy sector .SPNY are expected to have fallen 19.7% in the third quarter from a year ago, LSEG data shows.
Reporting by Caroline Valetkevitch
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
