The Entire Market Relies On These Stocks

Joseph Carlson (0:00)

Now, we're finally getting into the third quarter earnings season, over the next four weeks, the majority of companies in the stock market will report their earnings and give us a progress update. In that, it'll determine the direction the market takes. Because like many earnings seasons, there's a lot priced in, but in this case, that is especially the truth. There is a lot riding on this earnings season. The growth expectations are extraordinary. In fact, the weighted growth of the S&P 500 in this earnings quarter is expected to exceed 35%.

That is a massive growth by the market. And the majority of this earnings is reliant on a small number of companies, the so-called AI companies and the energy companies. Now, I'll be breaking down this data, trying to make sense of it. We'll be going through how much of the market is made up by AI, where the earnings are all going, and how this will likely play out over the next year. We'll also be looking at my portfolio. We'll be breaking down how fast my portfolio is expected to grow this quarter. We'll also be looking at the week ahead. For example, if we look at the calendar here, we have a lot of companies reporting earnings this week. For example, we have JP Morgan, that's a big one tomorrow. We have United Healthcare. We have ASML. I own a lot of ASML, super important company in the semiconductor industry. And then of course we have TSM and many others. We'll be going through each of them, and I'll be giving you my thoughts on what to expect. We also of course have news to go through. For example, Mark Zuckerberg ordered a watermelon. He teased that this morning. In reality, that was the code name for the new model that he was going to release. The new model is called Muse Wonder. The stock is now up 4% on the day. And he posted the benchmark, so we'll be looking at how good this model actually is. And then finally, as a fail of the week, we have to highlight Kelly Clarkson. We'll be going through her spat with a small business at the end of this episode. Now of course, just a reminder, if you haven't already, try out qualtrum.com. It is the website that I own. I created the membership, so it's mine. But even objectively, scientifically, it is the best membership in the world. I really think you'll enjoy it. A lot of people have a lot of fun with this membership. You gain access to a private Discord community that's moderated. You'll meet like-minded investors and they're very ambitious. You'll learn about a lot of stocks that I don't even talk about. As well as you gain access to a lot of exclusive content, deep dives, AMAs. I have hour-long portfolio updates going over each stock that I own, and ones that are on my watch list. As well as Qualtrum is getting better and better with the technology. For example, I just released the mobile app in IOS and Android. The feedback has been overwhelmingly positive. People love it. It helps you check your stocks, keep up to date. It's really easy to use. I think you'll like it. So try it out now. Risk free. You can do so at qualtrum.com. Now, jumping in, we start off with Q3 earning season. It has begun. This is the first week. Around week three is where we really have the biggest earnings drop. That's when all the big tech companies report their earnings. But even this week, it starts off with a bang. With TSM and ASML, those are two companies that are very symbolic of how the whole AI thing will go. And why is AI so important? Well, AI is not just a buzzword. AI really means a lot of earnings growth in this market. Now, the media has hyped this up to, of course, be a very important earnings season. There's many articles like this where Barron's is saying that the next move for stocks hangs in the balance as we jump into Q3 earnings. Now, even though oftentimes it feels like every earnings season is the most important earnings season, I do believe that this one is actually really important. And part of the reason why is because bond yields are going up. There's a lot of reasons that the market should be down more, but yet the S&P 500 is trending towards all time highs. So when we look at this, we're in a situation where stocks should have a lot of pressure because yields are going up on treasuries, yields are going up on bonds, which typically pushes stocks down. But they've been resistant. And part of the reason they're resistant is because stocks are growing quickly. So, investors are more forgiving of their lower starting yields when you can assume a great amount of growth. And the growth being implied in this quarter is substantial. From factset, they say that the S&P 500 is likely to report earnings growth above 35%.