Log in Open account
International
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investor accounts lose money when trading CFDs with this provider.
Show more
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.
Show less
Q4 2023 earnings scorecard and Arm bonanza Q4 2023 earnings scorecard and Arm bonanza Q4 2023 earnings scorecard and Arm bonanza

Q4 2023 earnings scorecard and Arm bonanza

Equities 5 minutes to read
Picture of Peter Garnry
Peter Garnry

Chief Investment Strategist

Summary:  With most S&P 500 companies having reported, the Q4 2023 earnings season is nearing its end. We can observe various winners and losers based on different metrics. Companies exceeding analysts' expectations tend to generate positive market sentiment and the top five surprises on revenue among large US stocks include NextEra Energy, General Electric, Eli Lilly, Linde, and Meta. In terms of revenue growth Eli Lilly, Meta, Microsoft, General Electric, and Uber lead the pack in terms of fastest revenue growth during the quarter.

The winners and losers in Q4

With around 70% of S&P 500 companies having reported earnings we are getting closer to the end of the Q4 2023 earnings season. The table below shows the winners and losers of the earnings season. Positive revenue surprises are often key indicators of future sentiment and here the top 5 surprises among the largest US stocks are NextEra Energy, General Electric, Eli Lilly, Linde, and Meta. In terms of revenue growth, the fastest growing companies are Eli Lilly, Meta, Microsoft, General Electric, and Uber.

NextEra Energy is the most valuable US utility company and is spearheading the transformation towards renewable energy developing and operating renewable energy assets, selling battery solutions, and EV charging stations. Many investors may not know the company, but it has grown to $28bn in revenue from just $18bn in 2020 delivering net income of $6.9bn in 2023. The company reiterated in its Q4 earnings release its commitment to deliver EPS growth of 6-8% annualized through 2026.

Sometimes analyst estimates do not reflect the true underlying estimates priced in the market and thus often the share price performance around earnings release can be a good way to gauge the winners and losers. Based on share price performance the three best earnings and guidance came from Meta, Netflix, and Amazon. On the negative side, the market was the most disappointed about earnings and outlook from Tesla, Alphabet, and McDonald’s.

9_pg_1
9_pg_2

Arm shares are defying financial gravity

The big winner yesterday was the chip design company Arm that went public last year. Arm reported better than expected earnings and listed its earnings guidance driven by huge demand for AI and smartphone makers putting more cores into phones. The company guides fiscal Q4 (ending 31 March) revenue of $850-900mn against estimated of $778mn. According to Arm management the AI boom is not hype and the cycle has just begun and is the most transformational technology of our lifetime. One of the key drivers going forward is that a lot of its customers are shifting to a new technology version called V9 which comes with almost double royalty rate. Arm’s IP is used in electric vehicles, smartphones, TVs and cameras. While Arm is naturally talking their book, which any investor should take with a grain of salt, the strong guidance was strong and instrumental in lifting sentiment.

However, it is important to recognize as an investor that the expected growth rate is “only 22%” in the fiscal year that ends in March 2025 and that the company is already at around 40% net profit margin. Investors are right willing to pay more than 2x forward operating earnings of that Nvidia which is one of the most hyped large cap stocks in the world. Arm is an impressive company but when valuations reaches these levels investors should be cautious. The 2021 technology hype cycle is a stark reminder of this.

9_pg_3
9_pg_4
Arm share price | Source: Saxo

Recent notes on equities

Tesla earnings review: Between two mountain tops? 

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • 350x200 althea

    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • 350x200 peter

    Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • 350x200 charu (1)

    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • 350x200 ole

    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

 The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International
Products & pricing
Platforms
Accounts & service
General
Other
Legal

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.