DIGIVESTASI - The earnings growth of six major tech companies is expected to slow down in the coming quarters. The earnings per share (EPS) growth rate of the 'Top 6' tech giants - Apple, Amazon, Alphabet, Meta, Microsoft and Nvidia (NVDA.O) - fell from a to 15.5% in the first quarter It is expected that this will happen. The forecast for the same period in 2025 is 42.2%. 

This was announced by Jonathan Golub, strategist at UBS Global Research. He also sought to downgrade the large-cap stocks. As quoted from Reuters, Golub said on Tuesday (April 23, 2024), "The downgrade of the highest rating 'overweight' to 'neutral' is not based on a high level of judgment or doubts about artificial intelligence. No," he said. "Rather, it is a recognition that intense competition and cyclical effects are weighing on these stocks," he explained.

 
However, stocks of other tech companies outside the "big six" are likely to perform better. EPS growth in the first quarter of 2025 is expected to be close to 26%, compared to 11.1% in the same period this year. 
The top six companies considered leaders in the technology sector and the S&P 500 are expected to report their quarterly results in the next two weeks.  

Rising bond yields, recent stronger-than-expected US economic data, and uncertainty regarding the Federal Reserve's rate cut prospects also weighed on high value stocks. We see four distinct cyclical waves in the earnings dynamics of these six companies.

It started during the COVID-19 pandemic that boosted consumer demand for personal computers (PCs), online shopping, and social media. After the pandemic subsided and the economy reopened, lower demand for tech products led to a decline in revenue, leading to lower EPS growth in 2022.

 
And in 2023, profits are expected to increase due to easier comparisons and lower operating costs for companies. 

"After a sharp decline in revenue growth from Q4 2023 to Q3 2024, we expect supercap technology revenue to normalize soon," Golub said. These companies' 12-month price-to-earnings (P/E) ratios currently range from 21.6 to 39 times, compared to the S&P 500 benchmark index's new trading price of around 25 times.

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