Upcoming Q2 earnings season implies Big Tech will continue to dominate: Barclays

Barclays (LON:BARC) analysts say the dominance of Big Tech is likely to continue in the upcoming Q2 earnings season.

In a note to clients Wednesday, the bank highlights Big Tech's outsized contribution to the S&P 500's performance in the first half of 2024, delivering "42% returns vs. the rest of the SPX at +8%."

Barclays expects this trend to hold, with "consensus estimates implying that Big Tech earnings growth will continue to dominate in 2Q24, with nearly +32% EPS expansion expected vs. the rest of the SPX at +3.3%."

This comes despite a projected slowdown in Big Tech's year-over-year growth, following a strong first quarter and even stronger fourth quarter in 2023.

The report also acknowledges the potential for increased volatility in the second half, noting that "the third quarter is typically the choppiest in any given year." However, they project a broader pickup in earnings growth across the market later in the year, with the S&P 500's EPS expected to reach $65 by the fourth quarter.

Outside of Big Tech, Barclays says consensus looks to Healthcare and Energy for a modest upside contribution, while Materials and Industrials are expected to detract.