With NVIDIA reporting actual results for Q4 on February 25, all the companies in the “Magnificent 7” have now reported earnings for the fourth quarter. How did the earnings reported by these seven companies perform relative to analyst expectations and year-ago results?
On December 31, the estimated earnings growth rate for the “Magnificent 7” companies for Q4 was 20.1%. Overall, 86% (6 out of 7) of the “Magnificent 7” companies reported a positive EPS surprise, compared to 73% for all S&P 500 companies. In aggregate, earnings reported by the “Magnificent 7” companies exceeded estimates by 5.5%, compared to 6.8% for all S&P 500 companies.
As a result, the “Magnificent 7” companies reported actual earnings growth of 27.2% for the fourth quarter, which is above the earnings growth rate of 18.4% for these seven companies for the third quarter. In fact, this marks the 10th time in the past 11 quarters that the “Magnificent 7” companies have reported earnings growth above 25%. On the other hand, the blended earnings growth rate for the other 493 S&P 500 companies for Q4 is 9.8%, which is below the earnings growth rate of 12.2% for these 493 companies for the third quarter.
Overall, three of the “Magnificent 7” companies are among the top five contributors to earnings growth for the S&P 500 for the fourth quarter: NVIDIA, Alphabet, and Microsoft. Outside of these three companies, Boeing and GE Vernova are the other contributors in the top 5. However, earnings for both of these companies benefited from large gains. The actual EPS for Boeing included a $9.6 billion dollar gain on a sale connected with closing of the Digital Aviation Solutions transaction, while the actual EPS for GE Vernova included a $2.9 billion tax benefit due to a U.S. valuation allowance release.
Looking ahead, analysts expect double-digit earnings growth for both the “Magnificent 7” companies (23.5%) and the other 493 S&P 500 companies (11.8%) for CY 2026.
*Not in order of contribution
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