Key points on the Q4 2024 earnings season

The performance during the season has been encouraging, with corporate profits exceeding expectations.

With more than 75% of S&P 500 companies having reported their results, earnings grew 11% year-over-year, surpassing expectations and marking the fastest pace in three years.

Key data:

• 76% of companies beat estimates, with an aggregate growth of 7%.

• Excluding tech megacaps, earnings grew 20%, the fastest pace since 2022.

• Megacaps (MSFT, AAPL, GOOGL, META, AMZN) 27% annual growth, with profit margins close to 25%. NVIDIA will report on February 26, with expected growth of 72%.

• The P/E multiple premium of megacaps fell to 30%, below its five-year average (50%).

• AI dominated earnings calls, with tech companies projecting a 49% increase in CAPEX for 2025.

The corporate sector remains resilient, with AI as a key driver. However, the 14% earnings growth forecast for 2025 may face challenges amid a restrictive monetary environment and new trade tariffs.

Tech Megacap Earnings Growth Minus S&P 500 Earnings Growth Excluding Tech Megacaps

Source: JP Morgan