The Wednesday Letter #217 - 4/24/2024

THIS WEEK: Mag 7 Valuation and Profitability; Tesla Q1 Earnings; Israel's Response; Elite Yet Complacent Colleges; Copenhagen Stock Exchange Fire; Talking Futures and Equities.

MAG 7 VALUATION AND PROFITABILITY

First quarter earnings for the ‘Magnificent Seven’ largest tech companies will be reported in the next few weeks starting with Tesla yesterday, Meta today, Microsoft and Alphabet tomorrow, Amazon on 4/30, Apple on 5/2, and finally NVIDIA on 5/22. Looking at PE (price/earnings) ratios seems quaintly inadequate at a time when investors have little care for valuation, but these ratios can be instructive when considered alongside profitability and growth expectations. The table shows 2024 and 2025 eps (earnings per share) consensus estimates and corresponding PE ratios, as well as 2023 profit margins and tax rates.

click to enlarge.

Tesla and Amazon are expected to have the largest increases in earnings from 2024 to 2025 but they are also the two companies with the lowest profit margins. See more on Tesla below after yesterday’s first quarter earnings release.

Amazon’s margins have always been low, as is typical in retail and its cloud business AWS has been i…