Tech Sector: Historical EPS, Revenue Growth Heading into Q2 ’24 Earnings
2024.07.23 03:46
Looking at the above table, the tech sector is expected – as of last Friday, July 19 ’24 – to grow EPS +18.8% for full-year ’24, while Q2 ’24 expected tech sector EPS growth is currently expected at +17.2%, up from +16.9% as of June 30 ’24.
Q2 ’24 tech sector revenue growth is now expected at +9.7%, which is up from an expected +6.7% revenue growth as of June 30 ’24. (That’s a bigger revision than you might think with only 5 of the 65 companies in the tech sector having reported Q2 ’24 earnings as of July 19 ’24.
Here’s the history of the sector since Covid:
Actual tech sector growth metrics:
- Q1 ’24: +27% EPS growth, +8.5% revenue growth;
- Q4 ’23: +24.2% EPS growth, +7.8% revenue growth;
- Q3 ’23: +15.3% EPS growth, +2.8% revenue growth;
- Q2 ’23: +5% EPS growth, +0% revenue growth;
- Q1 ’23: -8.3% EPS growth, -2.9% revenue growth;
- Q4 ’22: -10% EPS growth, -2.4% revenue growth;
- Q3 ’22: -0.2% EPS growth, +7.2% revenue growth;
- Q2 ’22: +1.5% EPS growth, +7.3% revenue growth;
- Q1 ’22: +14.6% EPS growth, +12.4% revenue growth;
- Q4 ’21: +24.6% EPS growth, +12.8% revenue growth;
- Q3 ’21: +38.2% EPS growth, +13.2% revenue growth;
- Q2 ’21: +49.6% EPS growth, +22.2% revenue growth;
- Q1 ’21: +44.9% EPS growth, +22.1% revenue growth;
Those ’21 and early ’22 growth rates were basically versus the easy compares of 2020, which was all pandemic-influenced. In calendar 2020, the tech sector averaged 10% – 11% EPS growth and 5% – 6% revenue growth, with Q4 ’20 being the strongest quarter.
The point being that the EPs and revenue growth being seen currently is likely mainly AI (or fundamental driven) rather than from easy comp’s as before.
What’s really somewhat surprising in the above data towards the top of the page, is that expected Q2 ’24 revenue growth has jumped 300 bp’s or 3% just in the last 3 weeks alone, and that’s before seeing Google’s revenue or IBM (NYSE:) (coming later this week).
As someone who is more cautious given the similarities between the late 1990’s and today, the weaker breadth, etc., and a tough seasonal between August and early October, this data if it reflects reality for the tech sector EPS and revenue growth is encouraging.
Conclusion:
The trends are obvious looking at the above data. You had a slow year during 2020 thanks to Covid, and then investors saw remarkable growth in 2021 in both tech sector earnings and revenue, and then 2022 saw a gradual slowing thanks to rate hikes by the Fed and worries over a US recession, and now ’24 is back to a re-acceleration, probably a lot of due to AI, and what’s happening around AI in terms of semiconductors, and other hardware.
Let’s see how the stocks trade on what are probably going to be good results, and more importantly, let’s see what guidance looks like.
Disclosure: None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. Investing can involve the loss of money even for short periods of time. All EPS and revenue data is sourced from LSEG.com. It’s recorded on a spreadsheet for historical tracking, but all the data appears on LSEG.com.
Thanks for reading.
