00:00 Speaker A
Indeed, magnificent seven and their earnings growth has really propelled earnings growth overall for the market, for the S&P 500 specifically. This chart comes to us via Lori Calvasina of RBC, uh, the chief equity strategist there. So here, let’s just look at the entire S&P 500 and the trajectory of earnings growth that we’ve seen over the past few years, 2023, 24. What’s expected for 25, 26, and 27. So a little choppy here, particularly this dip that we’re expecting to see this year before coming back, but kind of steady averaging around 10% or so. Then we just look at the magnificent seven specifically, which, whose growth far surpassed that of the rest of the S&P 500 for the last couple of years. This year, it’s really expected to decelerate and remain that way for the next couple of years. Part of this is, it’s just difficult to maintain that pace of earnings growth, especially since at least some of this came from NVIDIA, which was seeing leaps in year-over-year gains, as we were really seeing the beginning of the AI trend start to take hold. And then finally, we have the other 493, the S&P 500 excluding the magnificent seven. What’s notable here is that after we saw, again, sort of choppy growth over the last couple of years, we’re expected to see a little bit of an upward gain before stabilization in 2027. And this is what we’ve been hearing from a lot of strategists, this idea that as the magnificent seven slows down in terms of its earnings growth, that the other companies will start to pick up. We heard that most recently from Ryan Dietrich of Carson Group at the top of the show.
02:52 Speaker B
We know this time two years ago and last year was all about Mag 7. That’s where most of the growth and earnings growth were coming from. But it is, um, it has been, you know, broadening out, I guess is what I want to say. Now with the market acting the way it’s been, it’s a little different, but we think a broadening out still makes sense.
03:20 Speaker A
And that’s what’s so interesting here, Josh, is that even amidst all of the tariff uncertainties and all of this going on, that these types of earnings estimates have largely held intact. In other words, that big idea that the Mag 7 are going to slow a little bit and everything else is going to accelerate a little bit.