It's profit showtime for the S&P 500 technology and communications biggies — and it's expected to be a bonanza. But some will likely pull ahead.
Second-quarter profit reports from Microsoft (MSFT), Apple (AAPL), Facebook (FB), Alphabet (GOOGL) and Amazon.com (AMZN) are due out this week. And analysts are already handicapping their S&P 500 picks for growth and stock gains.
Wall Street sees the most top-line growth, 49.2%, coming from communication services giant Facebook, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. But when it comes to all important earnings growth, analysts are expecting more, 88.4%, from Google parent Alphabet.
And what about making money on the top tech and tech-related S&P 500 stocks? Amazon is the S&P 500 tech-related stock with the most upside, analysts say.
Tech And Telecom Headline Remarkable Quarter For S&P 500 Profit
S&P 500 profit gains in the second quarter are likely to set records. And tech giants are a big reason why.
Analysts think S&P 500 companies' profit will jump 74.2% in the second quarter, says John Butters, earnings analyst at FactSet. And if that's right, it would be the strongest period of profit growth since the 109% jump in the fourth-quarter of 2009.
And profit is only coming in stronger than anyone's wildest dreams. Nearly 90% of S&P 500 companies that reported their results so far topped profit expectations in the second quarter. And 86% of S&P 500 companies beat revenue views for the second quarter.
Technology's Massive Profit Contribution To The S&P 500
Tech stocks aren't the No. 1 source of growth in the S&P 500. But don't overlook their sheer profit contribution.
Information technology stocks in the S&P 500 are expected to post 33.2% higher quarterly profit, FactSet says. That only ranks sixth among the 11 S&P 500 sectors in terms of growth. But the sector's raw profit power is formidable.
Apple alone is seen posting an adjusted quarterly profit of $16.9 billion, or $1.01 a share. That's not only 57% more than the smartphone manufacturer made in the same year-ago period. It's a larger profit than any other S&P 500 company. Should you buy Apple stock now?
The only S&P 500 company with profit seen coming in anywhere close to Apple's is IBD Long-Term Leader Microsoft. Analysts think the software company will earn more than $14.6 billion, or $1.92 a share. That's up 31.8% from the same year-ago period.
But Apple and Microsoft aren't even where you'll find the most growth.
Looking For Growth? Find It With Alphabet And Facebook
The new S&P 500 market value darlings are showing fundamentals to back up their valuations.
No major tech or communications company is seen putting up top-line growth like Facebook. Analysts think the company's second-quarter revenue will hit $27.9 billion. If right, that's an astounding 49.2% top-line growth rate. And it's not just the top line that's jumping. Analysts think Facebook will report a quarterly profit of $8.8 billion, or $3.03 a share. That's 68% earnings per share growth from the same year-ago period.
Normally, that would blow out the S&P 500. But we're in a quarter where peer communications firm Alphabet is expected to make $12.8 billion, or $19.08 a share. That's 88.4% higher profit than the same year-ago period. Should you buy Alphabet stock now?
Believe it or not, though, Alphabet isn't the S&P 500 tech-related stock that will make the most money for investors, say analysts. That title goes to Amazon.com, which is actually a consumer discretionary stock. Analysts think Amazon will be trading for 4,269 a share in 12 months. That's more than 15% implied upside from Monday's closing price of 3,704.
So who's going to win the massive second-quarter profit season? It depends on how you measure it. But it's looking like a good time for all.
Sizing Up The S&P 500 Titans' Second Quarter
|Alphabet||(GOOGL)||46.4%||88.4%||$12.8||52.2%||6.1%||Communication Services||July 27|
|Amazon.com||(AMZN)||29.4||18.8||6.4||13.7||15.3||Consumer Discretionary||July 29|
|Apple||(AAPL)||23.1||57.0||16.9||12.4||5.3||Information Technology||July 27|
|(FB)||49.2||68.1||8.8||36.1||4.8||Communication Services||July 29|
|Microsoft||(MSFT)||16.5||31.8||14.6||29.9||6.0||Information Technology||July 27|
Sources: IBD, S&P Global Market Intelligence, * - to 12-month price target
Follow Matt Krantz on Twitter @mattkrantz
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