Are The “Magnificent 7” Companies Top Contributors to Earnings Growth for the S&P 500 for Q4?

A number of the companies in the “Magnificent 7” have been the top contributors to year-over-year earnings growth for the S&P 500 in recent quarters. Are companies in the “Magnificent 7” also expected to drive earnings higher for the S&P 500 for the fourth quarter?

Overall, three of the companies in the “Magnificent 7” are projected to be among the top 10 contributors to year-over-year earnings growth for the S&P 500 for Q4 2024: NVIDIA, Amazon.com, and Alphabet. Outside of these three “Magnificent 7” companies, the other seven companies that are top 10 contributors to year-over-year earnings growth for Q4 are in the Banks (Bank of America, Citigroup, JPMorgan Chase, and Truist Financial), Pharmaceuticals (Eli Lilly & Co. and Merck & Co.), and Semiconductors & Semiconductor Equipment (Micron Technology) industries. All seven of these companies are benefitting from easier comparisons to weaker earnings reported in the year-ago quarter, which in many cases were due to significant charges and other items that were included in their EPS for Q4 2023.

In aggregate, the “Magnificent 7” companies are expected to report year-over-year earnings growth of 21.7% for the fourth quarter. Excluding these seven companies, the blended (combines actual and estimated results) earnings growth rate for the remaining 493 companies in the S&P 500 would be 9.7% for Q4 2024. This would mark the highest earnings growth rate for the other 493 companies since Q2 2022 (11.4%). Overall, the blended earnings growth rate for the entire S&P 500 for Q4 2024 is 12.5%.

Analysts predict the companies in the “Magnificent 7” in aggregate will report earnings growth or more than 17% over the next four quarters. However, analysts believe the other 493 companies in the index will report (year-over-year) earnings growth or more than 9% over the next four quarters. As a result, the S&P 500 overall is also expected to report (double-digit) earnings growth rates of 11.6%, 11.6%, 15.2%, and 16.7% for Q1 2025, Q2 2025, Q3 2025, and Q4 2025, respectively.

*Companies are not listed in order of contribution

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