Opportunities for planning during the earnings season: Profit expectations for these stocks continue to rise, but valuations are getting cheaper
Special topic: Focus on the second quarter financial report of US stocks in 2026 On May 12, 2026, in Los Angeles, California, the Netflix corporate office area displayed the brand logo. Texas Attorney General Ken Paxton filed a lawsuit on Monday, accusing Netflix of illegally collecting user data (including children) and profiting from it, and also using the auto-play function to induce users to become addicted to watching TV series. Netflix denies all accusations. Now that U.S. stocks are entering the second-quarter earnings season, the stock prices of many stocks continue to fall, but Wall Street analysts continue to raise their profit forecasts, making the valuations of such stocks significantly more attractive. Nicole Nii, head of Americas equity strategy at HSBC Global Investment Research, said that the market is optimistic about overall profit expectations for this quarter, but performance certainty is highly concentrated in a few sectors. In addition to the main line of artificial intelligence, she is also optimistic about two types of investment opportunities: companies that are expected to benefit from tax rebate policies, and industry targets that rely on World Cup consumption to drive performance. The market unanimously expects earnings per share (EPS) of S&P 500 constituents to surge 22% year-on-year, the highest growth rate since the post-epidemic era. Historical patterns show that the stock prices of companies whose earnings exceed expectations usually rise slightly, but those whose performance falls short of expectations tend to fall even more. However, Nicole Nii is not very worried about this, because most of the performance increases this quarter come from the energy, semiconductor and hardware equipment sectors, and the profits of these industries are more predictable. After excluding the above-mentioned sectors, the profit growth rate of the remaining industries is expected to be only 5%, which is much lower than the overall growth rate of about 24% in the first quarter. Energy and technology sectors lead performance growth HSBC quoted FactSet data showing that the energy and information technology sectors led the market in profitability, with year-on-year earnings per share growth reaching 122% and 61% respectively. The seven largest technology giants in the US stock market (MAG7: , NVIDIA, Metaverse Platform, ) The overall profit growth rate is expected to be about 30%, and the profit before interest and tax growth rate is about 34%, which continues to confirm the boom logic of investment in the AI industry. Medical health is the only sector expected to see weaker profits, with the drag mainly coming from pharmaceutical companies; however, Nii Niko believes that there are layout opportunities in this sector because current market expectations have been pushed to lows. The artificial intelligence and technology sectors remain the core focus of the market, and there is still the possibility of performance exceeding expectations. Sectors such as consumer staples, industrial manufacturing, and automobiles are expected to benefit from the tax rebate policy; the consumption boom brought by the World Cup will benefit consumption sectors such as beverages and tourism. HSBC used quantitative screening to identify 24 stocks that met the following conditions: the market raised its profit expectations, its valuation was in the discount range, and its stock price fell simultaneously. Filter the list of top-ranked bids: Netflix (NFLX) According to HSBC data, the market has raised Netflix's forward profit expectations by 12% in the past three months, but the stock price has plummeted 21% during the same period; the stock has fallen by 40% cumulatively in the past 12 months, and its valuation has fallen to an extremely low level in the historical range. Netflix’s stock price plummeted nearly 42% in the past year, with multiple negative factors suppressing the stock price: the full-year performance guidance released in April fell short of market expectations, acquisitions Plans for Brothers Exploration fell through, and co-founder and former chairman Reed Hastings resigned. Media reported last week that the streaming media leader is exploring the launch of live TV channels and plans to launch multi-streaming platform bundles. Netflix will release its second-quarter earnings after the market closes on Thursday. T-Mobile US Telecommunications (TMUS) The stock's fundamentals and stock price also deviated seriously. Forward earnings per share estimates have been revised up nearly 9% over the past three months, while the stock price has fallen nearly 12%, with relative valuations also at historically low levels. The upward revision of profit expectations stems from its impressive first-quarter operating data: a net increase of 217,000 postpaid users, a year-on-year increase of 6% (205,000 in the same period last year). In April, the company reached two strategic fiber-optic broadband cooperations to expand its broadband business territory and fiber coverage in the northeastern United States; postpaid average revenue per user (ARPA) reached US$151.93, a year-on-year increase of nearly 4% (last year's US$146.22). T-Mobile will release second-quarter earnings on July 23.