Q2 US company earnings have started coming in and in general, positive surprises are encouraging so far. Of course, the earnings won’t just be about beats or misses. They’ll be about guidance, tone, and momentum, plus any major impact from US tariffs. In a market where sentiment is running high, any cracks in the narrative could trigger sharp reversals, which have been punished more than upside surprises. That said, strong execution could add fuel to the stock market rally, which continues to make fresh record highs.
Overall, earnings are expected to have climbed 6.5% in the quarter from the year-ago period, according to LSEG IBES data as of Wednesday. Last week saw major banks post bigger adjusted profit hauls from a year ago, while trading revenues were at all-time highs on geopolitical volatility. Most expressed optimism about the investment banking outlook for the rest of the year after dealmaking rebounded.
Frist tech titans to release results
This week sees more than 20% of S&P 500 companies are reporting with Google parent, Alphabet, and Tesla being the first of the “Magnificent Seven” megacaps to release on Wednesday after the US closing bell. As we have written before, as a group, the Mag 7 are back to outperforming the broader market that has returned toward performance being highly concentrated in a handful of names.
It’s been a volatile year for Tesla, with the stock down around 12% year-to-date. Sales have slumped, so revenues, margins and earnings are all seen falling sharply with double digit declines. Analysts expect just $0.42 per share in earnings (-23%), on $22.7 billion in sales with revenues seen tanking by more than 11%. That’s been down to fading EV market share, stronger competition and a tarnished brand. Loss of EV credit sales has also been a headwind. Investors are pinning their hopes on the earnings call with CEO Elon Musk for updates on robotaxis, new product launches like the long-promised Model 2, the latest on full self-driving (FSD) and AI initiatives, plus the impact of the loss of EV credits. Option mkts are pricing in a +/- 7.5% move on the day after results are published. Technically, support sits around $324/318, the 50 and 200-day simple moving averages, with July low at $288. Upside targets are $351 and $383.
Alphabet’s earnings will be scrutinised for AI monetisation, ad growth, and cloud profitability. The company is forecast to earn $2.42 per share on revenue approaching $79.70 billion. AI-related capex is also under the spotlight, particularly how management positions the Gemini model suite in competition with its peers. A 5.7% implied move priced in by the options market shows that investors are bracing for meaningful surprises, either up or down. Prices recently broke higher through a major Fib level (61.8%) of the February to April decline at $183.47. Below here is the 200-day SMA and midpoint of that move around $175/176. The daily RSI is marginally overbought after nine straight days of buying. The record high is at $208.70.
Other results amid record highs
Results are also due from Coca-Cola today, IBMÂ on Wednesday, and Blackstone, Intel, and Honeywell on Thursday. The latter is often seen as a proxy for the broader industrial economy. Texas Instruments release today as well, one of the first major chipmakers to report, so it will set the tone for the semiconductor space. Any signs of stabilisation amid inventory corrections and recent weaker industrial demand should boost the stock.
The S&P 500 printed another fresh record closing high and its tenth of the year on Monday. But prices closed near the lows of the day. The Nasdaq also settled higher at an all-time top. There is little US data this week so focus will be on these company results, especially guidance (if there is any) amid the ongoing tariff uncertainty.