Breakfast News: Mag 7’s Role in Q2 Earnings

July 21, 2025

Friday’s Markets
S&P 500 6,297 (-0.01%)
Nasdaq 20,896 (+0.05%)
Dow 44,342 (-0.32%)
Bitcoin $117,282 (-1.35%)

1. Mag 7 Set to Drive S&P 500 Earnings Growth

Last week, the Nasdaq experienced a rise of 1.6%, while the S&P 500 saw a 0.7% increase. Both indexes are close to their record highs as we approach the Magnificent Seven earnings season, during which over 100 S&P 500 companies will release their earnings reports.

“Earnings growth rate for the S&P 500 is 5.6%”: The latest estimate from FactSet shows predicted year-over-year growth accelerating from June’s 4.9% outlook, with Mag 7 stocks taking three of the top six forecast growth slots.
NVDA, MSFT, META lead shifting AI race: A report from The Wall Street Journal suggests the different businesses of the big seven AI stocks are diverging. Nvidia (NVDA), Microsoft (MSFT), and Meta Platforms (META) have gained more than 20% in 2025, as Apple (AAPL) has fallen 16%.

2. GOOG, TSLA Commence Mag 7 Earnings

Kicking off the group known as the “Magnificent Seven,” Alphabet (GOOG) and Tesla (TSLA) are set to release their second-quarter earnings reports on Wednesday. According to FactSet’s predictions, these two companies are projected to grow earnings by 14.1% compared to the same period last year. In contrast, the remaining 493 companies in the S&P 500 are expected to only see a modest growth of 3.4%.

Ranked 14th across all TMF services for its ability to beat the market over the next 5 years: Alphabet has a track record of beating Wall Street expectations, with forecasts showing an 11% rise in revenue from a year ago, with earnings per share up 13%. All eyes will be on further AI progress, though antitrust fears mean the stock is still down 2.4% in 2025.
Down 18% year to date: It’s back to basics with Tesla, as weakening auto sales have dragged investors away from AI excitement. A key question is whether the robotaxi business can catch up with Alphabet’s Waymo?

3. Key Results to Watch This Week

On Wednesday, ServiceNow (NOW) is set to release its Q2 earnings, following its previous success of surpassing both revenue and earnings expectations. This was made possible by its advanced agentic-AI technology which boosted subscription growth. Analysts anticipate a significant 19% increase in revenue compared to the same quarter last year.

A Moneyball Superscore of 74: Stock Advisor recommendation Chipotle (CMG) will also post Wednesday, with the stock dipping 10% so far in 2025 after a slowing first quarter. Some analysts predict an earnings dip, though a revenue consensus suggests 4% to 5% growth.
Up 196% in five years vs the S&P 500’s 96%: We’re due a Q2 update from Hidden Gems rec Kinsale Capital (KNSL) Thursday, after California wildfire losses led to a Q1 revenue miss. Watch for forecast double-digit percentage revenue and earnings growth.

4. EU Trade Tensions Escalate

On CBS News, Commerce Secretary Howard Lutnick stated that August 1st marks a firm cutoff date for the activation of President Trump’s tariff rates, following multiple delays in implementation by the president.

“Nothing stops countries from talking to us after August 1”: Lutnick was responding to questions about duties on European Union (EU) imports, and emphasized the new rates will be paid from that date.
EU preparing to retaliate: EU talks are expected to commence this week to work out a response plan if no deal is made by the deadline and Trump’s threatened 30% levy becomes reality.

5. Next Up: VZ and DPZ Get the Ball Rolling

Verizon (VZ) is set to release its Q2 earnings report ahead of today’s market opening, having missed its revenue targets on five occasions during the previous two years. In its most recent quarter, the telecommunications titan experienced a 1.5% increase in year-over-year revenues. Analysts anticipate an improvement, predicting a growth rate of 2.8% for this reporting period.

Shares up around 5% on the news: Domino’s Pizza (DPZ) posted a 3.4% rise in Q2 same-store U.S. sales this morning, ahead of a 2.2% estimate, though EPS of $3.81 fell slightly short of the expected $3.95. A 4.3% revenue rise to $1.15 billion hit the target.
Tariff revenue hit?: We’ll have a Q2 update from two-time Rule Breakers recommendation NXP Semiconductors (NXPI) after market close. The Netherlands-based chip maker previously warned of a possible $3 billion drop.

6. Your Take

On this Friday, we delved into the qualities you value in a strong management team. Today, let’s discuss, what factors could deter you from investing in a company, when it comes to leadership? Engage in discussions with your peers and family or join our community to learn from fellow Fools on this topic.

2025-07-21 16:01