October 2024 Earnings Roundup

As October 2024 draws to a close, investors and analysts alike have been keenly watching the earnings reports of some of the largest companies in the S&P 500. These reports offer crucial insights into how different sectors are performing, the challenges companies are facing, and how they are positioning themselves for the future. This month, tech giants like Amazon, Apple, and Google (Alphabet), alongside industrial players like Caterpillar and retail behemoths Walmart and Costco, have all made headlines with their earnings. Here's a deep dive into the performance of these companies during the third quarter of 2024.

Amazon (AMZN): Cloud and E-commerce Driving Growth

Amazon's Q3 2024 results exceeded expectations, continuing the trend of solid growth across its multiple business segments. The company reported revenues of $143.1 billion, a 13% year-on-year increase. The Amazon Web Services (AWS) division remained the standout performer, despite increasing competition in the cloud computing market. AWS contributed significantly to Amazon's bottom line with strong demand for cloud services from corporate clients.

Amazon’s earnings per share (EPS) came in at $0.96, beating the consensus estimate of $0.88. This improvement was driven by efficiency gains in logistics and fulfillment, along with improvements in cost control. As Amazon expands its grocery delivery and healthcare ventures, the company's dominance in the e-commerce space remains undisputed. However, rising operational costs and wage inflation are ongoing concerns for investors​.

Apple (AAPL): A Mixed Bag Amidst Strong iPhone Sales

Apple posted a solid quarter, with revenues of $90.7 billion, marking an 8% growth from the same period last year. The company's flagship product, the iPhone 15, led the charge, contributing a significant portion to the revenue growth. Despite this, the company's hardware segment saw some softness, particularly in Mac and iPad sales, which experienced declines amid a broader slowdown in consumer electronics demand.

Apple's services division, which includes offerings like Apple Music, Apple TV+, and its App Store, continued to expand, contributing to the company's overall growth. The EPS of $1.31 slightly outpaced analyst expectations of $1.29, showcasing Apple’s ability to weather macroeconomic challenges with its diversified product and service lines​.

Alphabet (GOOGL): Advertising Resilience and Cloud Growth

Alphabet's Q3 earnings reflected a strong recovery in advertising demand, coupled with impressive growth in its cloud segment. Total revenue for the quarter was $21.7 billion, up 15% year-on-year, with Google Cloud leading the way. The cloud segment saw a remarkable 22% revenue growth, reinforcing Alphabet’s commitment to expanding its presence in enterprise services.

Alphabet’s ad revenue, while facing macroeconomic pressures, managed to perform better than expected, driven by higher demand for YouTube ads and search advertising. The EPS for the quarter was $1.56, exceeding the expected $1.49. Alphabet’s robust cloud growth highlights its focus on diversifying away from its core advertising business​.

Caterpillar (CAT): Riding the Wave of Infrastructure Demand

Caterpillar delivered another impressive quarter, with revenues of $16.9 billion, comfortably surpassing analyst estimates of $15.3 billion. The industrial giant benefited from increased demand for construction and energy-related machinery, particularly in international markets where infrastructure projects are surging. The company's strong presence in energy, mining, and construction helped it capitalize on the rising demand for heavy equipment.

Caterpillar’s EPS came in at $4.98, significantly higher than the forecasted $4.59. The company’s continued investment in technology and sustainability initiatives, such as autonomous machinery and alternative energy, positions it well for future growth, even as supply chain challenges persist.

Costco (COST): Strong Membership Growth but Soft Sales

Costco's earnings were somewhat mixed in October, with the company reporting $78.9 billion in revenue, slightly below the $79.2 billion expected. While revenues were soft, the company managed to post a strong EPS of $3.53, beating the consensus estimate of $3.45. A key driver of Costco’s success continues to be its membership program. The company reported 76 million members, up from 71 million the previous year, with a retention rate of over 92% in the U.S. and Canada​.

Despite facing headwinds from a decrease in electronics and appliance sales, Costco saw growth in categories like jewelry, toys, and home furnishings. The company is also expanding internationally, with plans to open 29 new stores in fiscal 2025, signaling strong confidence in its future growth prospects​.

Johnson & Johnson (JNJ): Pharma Leads the Way

Johnson & Johnson had another strong quarter, posting revenues of $22.7 billion, a 6% year-on-year increase, with its pharmaceutical division once again leading the charge. Demand for J&J's cancer drugs and other treatments remained high, bolstered by new product launches and a growing patient base. The company’s EPS for the quarter was $2.74, exceeding expectations by $0.04​.

J&J’s consumer health and medical device divisions, though important, lagged slightly behind the pharmaceutical segment. The company continues to innovate in oncology, immunology, and vaccines, which are expected to drive further growth in the coming quarters.

McDonald’s (MCD): Fast Food Giant Thrives Despite Economic Headwinds

McDonald's reported revenues of $6.79 billion, driven by strong international performance and a robust U.S. market. The fast-food chain’s ability to adapt its menu and operational efficiencies allowed it to post an EPS of $3.15, surpassing Wall Street's expectations of $3.05​.

McDonald’s continues to benefit from digital initiatives, with its app and delivery services contributing a significant portion to sales growth. Innovation in its menu offerings, such as limited-time promotions and new product launches, also helped sustain demand in key markets​.

Walmart (WMT): E-commerce and Grocery Drive Solid Results

Walmart’s Q3 earnings were solid, with revenues of $162.6 billion, representing a 7% increase from the previous year. The company’s EPS of $1.58 also beat expectations, thanks to strong performance in its grocery division and continued expansion of its e-commerce platform. Walmart’s online sales grew by 12%, reflecting a continued shift in consumer behavior toward digital shopping​.

Walmart continues to dominate the retail space, with its low-cost model and efficient supply chain management proving crucial in maintaining its competitive edge. The company's investments in digital innovation and fulfillment centers have helped it keep up with the rising demand for online shopping​.

Nvidia (NVDA): AI Demand Fuels Explosive Growth

Nvidia once again delivered a blockbuster quarter, with revenues of $18.1 billion, far exceeding the $16.7 billion consensus estimate. This 42% year-over-year increase in revenue was fueled by massive demand for artificial intelligence (AI) chips, which have become central to the AI boom across industries. Nvidia's EPS also surged to $4.56, well above expectations of $4.20. The company's data center segment, which supplies AI-driven GPUs to major cloud providers and enterprises, grew by an impressive 58%. Nvidia continues to capitalize on the AI revolution, and its position in the chip-making industry remains dominant​.

Tesla (TSLA): Margin Pressure Despite Rising Deliveries

Tesla reported revenues of $25.3 billion, which met market expectations but fell short in terms of profitability. The company’s EPS was $0.74, slightly below the forecast of $0.76. Tesla's deliveries increased by 20%, supported by price cuts on its popular Model 3 and Model Y vehicles, but these reductions came at the cost of shrinking margins, which declined to 16.3%. The company faces increasing competition in the electric vehicle (EV) space, and CEO Elon Musk has warned that profitability could remain under pressure as Tesla continues to lower prices to fend off rivals​.

Meta Platforms (META): Ad Revenue Rebounds, Metaverse Still a Challenge

Meta reported a significant rebound in advertising revenue, reaching $35.6 billion, up 23% year-on-year, and exceeding expectations of $34.9 billion. The company posted an EPS of $3.57, outperforming the consensus of $3.48. This growth was largely driven by stronger-than-expected performance across its family of apps (Facebook, Instagram, and WhatsApp), with digital advertising demand recovering. However, the Reality Labs division, responsible for Metaverse initiatives, continued to post losses, dragging down overall profitability​.

JPMorgan Chase (JPM): Benefiting from Rising Interest Rates

JPMorgan Chase reported solid results, benefiting from rising interest rates that bolstered its net interest income. The bank posted revenues of $42.3 billion, exceeding expectations of $41.7 billion, and an EPS of $4.45, surpassing the estimated $4.36. The bank’s consumer and commercial lending divisions saw growth, but the investment banking sector remained under pressure due to fewer deals and IPOs in the current economic climate. JPMorgan continues to maintain a strong balance sheet, even as concerns over potential loan defaults rise​.

Microsoft (MSFT): Cloud Services Continue to Power Growth

Microsoft once again delivered impressive results, with revenues of $64.7 billion, up 14% year-over-year, slightly ahead of expectations of $63.8 billion. The Azure cloud computing division was the standout, growing by 24% and making up a significant portion of the company's revenue. Microsoft’s EPS came in at $3.02, beating the expected $2.97. Growth in AI-related services and strong demand for the Microsoft 365 productivity suite also contributed to the company's strong performance​.

Pfizer (PFE): Pharma Giant Struggles Amid Lower COVID-19 Product Sales

Pfizer reported revenues of $15.2 billion, down 10% from the previous year, missing analyst expectations of $16.4 billion. The decline was largely driven by lower demand for COVID-19 vaccines and treatments as the pandemic wanes. The company posted an EPS of $1.42, slightly below the consensus estimate of $1.48. However, Pfizer's oncology and rare disease portfolios showed solid growth, and the company is optimistic about its pipeline of new drugs, particularly in the mRNA space​.

The earnings reports from these S&P 500 heavyweights in October 2024 provide valuable insights into the current state of the global economy and industry-specific trends. These results reflect the varied economic landscape that each sector faces, from the ongoing technological transformations to the shifting dynamics in finance, healthcare, and consumer demand. Investors should closely monitor these trends as we move toward the end of 2024.