Quant Ratings Updated on 120 StocksVIEW IN BROWSER
This isn’t just another week for the market. You’ve got geopolitical uncertainty in the background and a Federal Reserve decision on deck. But it’s the surge of major earnings about to roll in that could really move the needle. And that’s where we could see fireworks on Wall Street. Over the next couple of days, five of the Magnificent Seven stocks will report results – and their updates could go a long way in determining the market’s next move. We already got an early signal last week. As I discussed in last Thursday’s Market 360, Tesla Inc. (TSLA) was one of the first major companies to report – and it came in ahead of expectations, reinforcing what we’ve been starting to see more broadly. Because so far, this earnings season isn’t just holding up… It’s coming in even stronger than expected. That’s why, in today’s Market 360, I’ll walk you through what’s driving this earnings momentum and what the latest data tells us about where the market could be headed next. Earnings Season Is Gaining MomentumEarnings season is still in its early stages, but things are about to accelerate in a big way. Roughly one-third of S&P 500 companies are set to report this week alone, making it one of the most important stretches of the entire earnings season. And so far, the results have been better than expected. According to FactSet, about 28% of S&P 500 companies have announced quarterly results, and 84% of them have exceeded analysts’ expectations. But the real strength lies in technology. The average earnings surprise for tech is 21.1% in the first quarter. Revenue is coming in 5.8% higher than expectations, too. That’s an important detail. When companies are beating on both the top and bottom line, it tells us demand is holding up. And analysts are starting to take notice. The S&P 500 is now anticipated to achieve 15.1% average earnings growth – that’s up from 13.1% on March 31. That’s not what you typically see in a fragile market. It’s what you see when momentum is building beneath the surface.
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What’s Driving the StrengthSo, what’s driving this earnings momentum? It comes down to one key trend: data centers. Right now, companies are pouring billions into building out the infrastructure needed to support artificial intelligence. And that demand is starting to show up clearly in the numbers. Order backlogs for data center-related companies are climbing sharply, giving these businesses strong visibility into future revenue. That’s critical. Because it tells us this isn’t a short-term spike in demand – it’s sustained. At the same time, major tech companies continue to invest heavily in expanding data center capacity across the U.S. In fact, estimates show that global data spending will be somewhere around $750 billion this year, a trend that shows no signs of slowing down. Put it all together, and the message is clear: This earnings strength is driven by a powerful, long-term investment cycle tied directly to AI. What the Data Is Telling MeWhen markets get noisy like this, I don’t chase headlines… I follow the data. That’s where my Stock Grader system (subscription required) comes in. Every week, it analyzes thousands of stocks based on fundamental and quantitative factors that have historically driven outperformance – such as earnings growth, sales momentum, analyst revisions and overall financial strength. And I’ve just updated it with the latest data. So, let’s take a closer look at my latest Stock Grader ratings for 120 big blue-chip stocks. Of those 120 stocks…
- Twelve stocks were upgraded from Strong (B-rating) to Very Strong (A-rating).
- Twenty-three stocks were upgraded from Neutral (C-rating) to Strong (B-rating).
- Fifteen stocks were upgraded from Weak (D-rating) to Neutral.
- Five stocks were upgraded from Very Weak (F-rating) to Weak.
- Seventeen stocks were downgraded from Very Strong to Strong.
- Twenty-seven stocks were downgraded from Strong to Neutral.
- Eighteen stocks were downgraded from Neutral to Weak.
- And three stocks were downgraded from Weak to Very Weak.
I’ve listed the first 10 stocks rated as Very Strong below, but you can find a more comprehensive list – including all 120 stocks’ Fundamental and Quantitative Grades – here. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly.
| APG |
APi Group Corporation |
A |
| BKR |
Baker Hughes Company Class A |
A |
| CBOE |
Cboe Global Markets Inc |
A |
| CTRA |
Coterra Energy Inc. |
A |
| CX |
Cemex SAB de CV Sponsored ADR |
A |
| EME |
EMCOR Group, Inc. |
A |
| EQT |
EQT Corporation |
A |
| HAL |
Halliburton Company |
A |
| INTC |
Intel Corporation |
A |
| KLAC |
KLA Corporation |
A |
Put simply, this is a more selective market, where strength is being rewarded and weakness is being left behind. And that selectivity is happening for a reason… The Bigger Shift Now UnderwayThis kind of divergence isn’t random… It’s being driven by a much bigger shift now underway in the market. We’re entering a new phase of the AI boom. The first phase was driven by excitement, big ideas and the companies most closely tied to them. Now that AI is moving from concept to execution, the market is starting to reward something very different. And that’s exactly what we’re seeing in the earnings data. Behind the scenes, companies are spending aggressively to build out the systems that enable AI. And that demand is now showing up in results. That’s why this market is becoming more selective. The companies delivering real results are starting to separate themselves from the rest. That’s the reset. And it’s already in motion. That’s why I put together a special presentation breaking down what I call the AI Reset, where this shift is headed next and which types of companies are best positioned to benefit. If you want to stay ahead of what’s coming, I strongly encourage you to watch it now. Sincerely, |
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