NEW YORK - U.S. companies releasing quarterly results in the coming weeks face investors who expect no less than stellar growth, with estimates particularly high for Wall Street technology heavyweights such as Nvidia and Microsoft.
Among the upbeat outlooks, AI chipmaker Nvidia in May forecast quarterly revenue above estimates, while Microsoft in April forecast intelligent cloud revenue mostly ahead of Wall Street targets. To some strategists, the only slight decline in forecasts since April 1 could bode well for this earnings season since the majority of companies will still likely beat analysts' forecasts. On average, nearly 80% of S&P 500 companies have beaten analyst earnings expectations in the past four reporting periods, per LSEG data.It could also mean less impressive beats by companies this season given the higher bar, according to Goldman Sachs strategists and others.
Estimates for the S&P 500 communication services, consumer discretionary and technology sectors have increased since April 1. Reports from heavily weighted megacaps are expected to be critical to the earnings season. To be sure, some investors are watching this earnings season to see whether profit growth from companies outside of the megacap names may be starting to catch up to the tech-related leaders.
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