Meta surges while Tesla plunges... Q4 earnings create winners and losers among M7

US Big Tech Q4 Earnings Reports

Meta rises 7% in 2 weeks on 'revenue growth'

Tesla plunges 18% on disappointing results

All eyes on Nvidia's earnings on the 26th

M7 valuation concerns... attention turns to alternatives

The Magnificent 7 (M7) companies that have dominated Wall Street with synchronized upward trends are now showing divergent patterns. This comes as more companies fail to exceed market expectations. Wall Street sees Nvidia's upcoming earnings report on the 26th as a watershed moment for M7 investment sentiment.

Meta stock rises 'alone'

On the 12th (local time), Meta Platform's stock closed at $725.38, up 0.78% on the Nasdaq. It has jumped 7.23% in the two weeks since its earnings announcement on January 29th. This marks the most impressive gain among M7 stocks.

Analysts attribute this to quarterly results that significantly exceeded market expectations. Meta's Q4 revenue reached $48.3 billion, up 20.63% year-over-year and 2.8% above market consensus. Earnings per share (EPS) was $8.02, surpassing expectations by 19%. The implementation of AI in advertising significantly boosted revenue.

Other M7 companies are showing weak performance post-earnings. Apple's stock has fallen about 1% since its earnings release (January 30th), Amazon (February 6th) dropped 4%. Both Alphabet (February 4th) and Microsoft (January 29th) declined around 8.5%. This primarily stems from major business segments underperforming expectations.

Apple's iPhone revenue decreased 1% year-over-year, with Chinese sales particularly dropping 11%. Amazon and Alphabet's cloud revenue growth rates contracted by 4% and 4.9% points respectively year-over-year. Cloud services have been considered key growth drivers for both companies. While Microsoft's AI revenue grew 31%, it fell short of market expectations (32-33%). R&D investment costs for AI development surged, notably slowing operating margins.

Tesla, popular among Korean investors, showed the steepest decline among M7 stocks. It has fallen 18% since its earnings announcement (January 24th). Q4 revenue (approximately $25.7 billion) missed Wall Street's expectations ($27.2 billion). EPS came in at 73 cents, 4.83% below consensus. This reflects last year's 1% decrease in vehicle sales - the first sales decline since Tesla's founding.

"M7 valuation concerns... attention on Palantir and others"

Wall Street is focused on Nvidia's upcoming Q4 earnings report on the 26th. However, high market expectations pose a challenge. The market consensus expects revenue of $38.1 billion, exceeding the company's guidance of $37.5 billion. Wall Street projects Nvidia's EPS at $0.79, 1.61 times higher than the previous year ($0.49).

A research center director at a Korean securities firm stated, "Nvidia's stock rose over 170% last year alone. Justifying such gains requires exceeding market expectations, which won't be easy."

Experts suggest considering other AI-related stocks like Broadcom and Palantir. Samsung Securities' Global Stock Team Head Jung-hoon Seo noted, "Big tech's increased CAPEX guidance is positive for ASIC design company Broadcom," adding, "Palantir has moved beyond AI development to actual service provision and holds advantages in international competition."

Han Gyeol-seon Reporter always@hankyung.com