Typically, we’d see a company outperform the broader market after an earnings beat, but this earnings season feels different. Why?

 

Investors aren’t just focused on whether a company beat earnings expectations. They’re also asking, “What’s next?”

With mega-cap tech driving the market, the story this earnings season is all about AI innovation. The companies investing strategically in AI are the ones to pay attention to.

 

Watch Elizabeth Evans’s Fox interview with Charles Payne for more insights on this earnings season below ⬇️⬇️⬇️

 

Transcript:

Four times a year, investors are put on this roller coaster ride. And I got to tell you it’s filled with those euphoric highs but also crushing lows. We call it earnings season. And this earnings season has been particularly tough because the numbers are the best, right? These earnings results are phenomenal. They’re crushing Wall Street expectations.

But it’s also among the hardest ever really. Take a look at this table, folks. The reactions have been harsh, I mean really, really harsh compared to its historic average. Misses are crushed, but so are beats, also. But we also have had this drama at the fed this week, right? We had the historic trip to Asia by President Trump.

And there’s still lingering questions, including, you know, this mounting shutdown. So, I want to bring in Evans May Wealth management partner, Elizabeth Evans. You know, Elizabeth, first, I just want to get your assessment of this earnings season so far.

Insights on current earnings season

Well, good afternoon, Charles. All your points on earnings are so true. Earnings have really been so far so good. But what is different this earnings season is if we look at the companies at the end of last week, 29% of the companies in the S&P 500 had reported. Those reporting had excellent reports, really surpassing analyst expectations. However, the market reaction following that print has been very mixed.

So, what we traditionally see is when a company beats the expectations, the next day, it will outperform the broader market by at least 1%. And what we’re seeing is those companies that are beating, the median company is actually lagging the broader market by more than zero, 0.3% on the other end. So, every single company going into this print, I really believe investors had a different risk or concern that not only did the company need to beat on the top and bottom line, but management needed to assuage that concern.

And depending on that commentary and that guidance has really dictated the aftermarket performance.

Is there one name that stands out to you as maybe the biggest or most disappointing reaction so far?

Well, I think Meta certainly was the most disappointing. You know, going into it, going into the print, investors were concerned about AI spend and when that would really deliver return on investment for shareholders.

And there’s been whispers that Meta is behind the ball as it relates to AI. So, Mark Zuckerberg did absolutely nothing to really comfort investors. He said we’re going to tell you to wait-and-see approach and we’re heads down on development. So, that’s kind of on the negative.

On the positive side, what we have seen, you know, this has been such a tremendous week for Mega-Cap tech. And what we’re hearing time and time again is just the tremendous amount of increased CapEx spending in 2026, even more than was previously expected. And that is huge for the market. And really what’s underpinning the market in the economy.

 

Let’s talk about making some money here, okay. Because I want to talk about some of the ideas that you like. And I want to begin with the long ideas here that you like. I know, Lilly’s on the list, Citi, Alphabet.

But let’s start with NextEra, because, you know, it’s one of these names that did extraordinarily well under the Obama administration, it used to be Florida Power & Light. It’s been sort of sideways, and I’m not sure it’s kept up with some of these other utility plays.

Why do you like NextEra here?

I think when I was on the show last month, we were talking NextEra as a non-tech idea, and since then, it’s outperformed the broader market 3 to 1. So, NextEra energy is not your grandfather’s utility. This is really a growth story with yield that’s really tied to AI data centers’ clean energy infrastructure.

So, you’re getting growth-like demand with utility-like consistency. It’s trading at a 22 times forward PE, has a 3% dividend yield. So, I think there’s two catalysts, Charles, in the short term and in the long term. So, in the short-term I think we’ll see a Florida rate case concession coming in November. That has been a big overhang to the stock and could provide a boost to earnings.

And then longer term, we’ve just seen a recent announcement with Alphabet to restart the Duane Reade nuclear site in Iowa. And Goldman estimates that could add $0.16 a share to their earnings once it’s back up and running annually. So, this is one that I think has legs and still is trading at a reasonable valuation.

 

I love how thorough you are with all of this, Elizabeth. By the way, again, I’ll reiterate for the audience, you like Lilly here, Citi and, of course, Alphabet, as well. Good stuff. Congratulations. I appreciate all the time you come on. Thank you.

Thanks, Charles. Happy Halloween. Happy Halloween.