Nvidia’s quarterly results have once again highlighted the weight of large market capitalizations in their reference markets. After Nvidia, all companies in the Magnificent Seven have updated their accounts to date. And with the expertise updated with these results, the Wall Street Septet offers higher stock market potential that of the seven largest companies on the European stock exchange.
THE Magnificent Seven Together (Nvidia, Alphabet, Amazon, Apple, Microsoft, Tesla and Meta) have an average potential of more than 16.5%, according to the market consensus collected by FactSet, compared to the seven granola European companies (acronym which groups together the most capitalized companies on the stock exchange of the Old Continent) which offer a 13% advance. Within these granolathan other investors talkative They are also known by the acronym The SaranaThere’s LVMH, SAP, Roche, ASML, Novo Nordisk and AstraZeneca; and that extends to eleven with Novartis, L’Oréal, Sanofi and GSK. All of them have a market capitalization well above the European stock market average, even if they are far from the billions of dollars that Apple or Nvidia move.
Initially, an investor might think that Magnificent Seven They could still improve on the upper floor, as the stock market crash in early August left analyst firms’ price targets even further away from their current price levels. But that’s not the case. In fact, the big Wall Street firms have even greater potential. after having bounced back twice as much as the Europeans compared to this month’s lows.
The directory market continues to be Wall Street for pundits, as the highest earnings growth forecasts are expected on this side of the Atlantic. Moreover, among the megacapitalized Among global stocks are technology and artificial intelligence (AI) companies. The only fear investors had after the company closed a strong first half of 2024 was that some Wall Street firms were warning about rising AI development costs, which could hit their ability to generate cash flow Similarly, experts fear that current levels of capital expenditure (capex) could outpace revenue volumes and no longer provide a positive return on investment (ROI), as WisdomTree notes.
“77% of companies managed to beat their profits and the 7% growth in S&P 500 sales was the strongest since the fourth quarter of 2022. While these numbers are not concerning, the truth is that once again, they are piloted mainly by the Magnificent Seven“, comments Wolf von Rotberg, equity strategist at Safra Sarasin Sustainable AM. Now, the consensus among experts expects S&P 500 earnings per share growth in 2024 to be close to 11%, compared to the 1.8% year-on-year expected within the Stoxx 600.
In contrast, there are more buy recommendations among the seven largest on Wall Street than on the European side, where only four of the seven raise a buy rating, according to the expert consensus collected by FactSet. Within the S&P 500, it is Amazon Value with Best Buying Advice and also the one with the greatest potential, more than 28%, up to $219.8 per share, the average price target stipulated by analyst firms. Alphabet (owner of Google) and Microsoft also occupy more than 20% of the path to go on the stock market.
Tesla, the only one with a hold recommendation among the Magnificent Sevenis the one with the least potential, since it is trading almost at the target price of $215.7. The presentation of results in the second quarter of the year better than expected by the market (revenues higher than 25.5 billion euros compared to the 24.6 billion projected by the consensus of experts included Bloomberg) has strengthened the attractiveness of the company which manufactures electric vehicles.
Inside the Stoxx 600, the granola ASML has the greatest potential, exceeding 32% at 1,089 euros per share, according to FactSet. The punishment of European luxury stocks, as well as most listed consumer discretionary stocks, leads LVMH (Louis Vuitton) to lose more than 6% in 2024. But the company continues It has a buy recommendation and a potential of close to 20%..
And Novo Nordisk, the largest capitalized company on the European market thanks to the reputation of its anti-obesity drug, would have a margin of improvement of 10% to 1007.2 Danish crowns (135.1 euros at the exchange rate). On the other hand, Roche (Hoffmann-La Roche) is evolving without issue, above 284 Swiss francs, which means in euros an excess of the consensus price target of 298.8 euros.
