These 3 Charts Clearly Tell the Q2 Earnings Season Story

 | Jul 31, 2020 06:18AM ET

Thursday’s blowout Q2 results from Apple (AAPL), Amazon (AMZN), Facebook (NASDAQ:FB) (FB) and even Alphabet (NASDAQ:GOOGL) (GOOGL) reconfirm the enormous earnings power of these technology players. This is particularly notable in the current uncertain macroeconomic environment that has weighed heavily on the profitability of older blue chips like Exxon (XOM), Coke (KO), Boeing (BA) and others.

These impressive Tech sector results show that the market’s preference for these stocks has a fundamental basis. No doubt the aforementioned four Technology stocks, coupled with Microsoft (MSFT), now account for 22.5% of the S&P 500 index’s total market capitalization, second only to the Technology sector and bigger than the Finance sector.

The following three charts do a good job of showing the key trends that have unfolded this reporting cycle.

The takeaway from the first chart is that analysts were totally in the dark as they set their Q2 EPS and revenue estimates and ended up being conservative. As we all know, most companies withdrew previously issued guidance given how difficult it was to project business trends during the period because of the pandemic.

The chart shows the proportion of the 313 S&P 500 companies that have reported through Friday, July 31st, beating EPS and revenue estimates.