Which “Magnificent 7” Companies Are Top Contributors to Earnings Growth for the S&P 500 for Q2?

A number of the companies in the “Magnificent 7” saw their stock prices increase during the second quarter, which helped to drive the value of the S&P 500 higher during this period. Are companies in the “Magnificent 7” also expected to drive earnings higher for the S&P 500 for the second quarter?

The answer is yes. Four of the companies in the “Magnificent 7” are projected to be among the top five contributors to year-over-year earnings growth for the S&P 500 for Q2 2024. These four companies (in order of highest to lowest contribution) are NVIDIA, Amazon.com, Meta Platforms, and Alphabet.

Outside of the “Magnificent 7” companies, Merck is expected to be the top overall contributor to earnings growth for Q2 for the index. Merck is benefitting from an easier comparison to a loss reported in the year-ago quarter.

In aggregate, these four “Magnificent 7” companies are expected to report year-over-year earnings growth of 56.4% for the second quarter. Excluding these four companies, the blended (combines actual and estimated results) earnings growth rate for the remaining 496 companies in the S&P 500 would be 5.7% for Q2 2024. Overall, the blended earnings growth rate for the entire S&P 500 for Q2 2024 is 9.7%.

Analysts predict these four companies in aggregate will report year-over-year earnings growth of more than 25% for the remaining two quarters of 2024. However, it is interesting to note that analysts believe the other 496 companies in the index will report double-digit (year-over-year) earnings growth starting in Q4 2024.

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