Earnings revisions no longer favor US tech heavyweights relative to the rest of the S&P 500, warns RBC

We’ve spilled a bit of ink lately on how abysmal S&P 500 earnings revision momentum has been lately — there are many more cuts than raises by the analyst community — with even the US megacap giants whose earnings growth has powered the bull market seeing estimates come under the knife.

RBC Capital Markets chief US equity strategist Lori Calvasina put these two themes together in her most recent note to clients, which has some unsettling implications for the market’s leaders.

“It’s worth noting that the rate of upward revisions no longer favors the top 10 market cap names relative to the rest of the S&P 500, suggesting that there has been some significant erosion of the earnings case for the mega cap growth names,” she wrote.

She included a chart that tracks how earnings revisions (at least directionally) in the current or next fiscal year for the top 10 components in the S&P 500 are faring relative to the remainder of the members in the benchmark US stock gauge. This metric has made a sharp move lower lately:

Those top 10 companies, as of the date on the above chart, are household names Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, Berkshire Hathaway, Broadcom, Tesla, and Walmart.