Four struggling, big name stocks that should rally this earnings season, according to Evercore ISI

Evercore ISI highlights Nvidia, Alphabet, Netflix and Booking as “beaten-down beat and raisers,” arguing cautious positioning could make upside earnings surprises catalyze higher share prices this earnings season. The note expects the S&P 500 to end 2024 at 7,750 and raised 2026 EPS by 6% to $330 (and 2027 EPS by 8% to $360) on continued AI spending and easing oil prices. It also projects Q2 earnings beats of 7% (vs. pre-pandemic levels) with the S&P 500 expected to deliver a second straight quarter of >20% earnings growth, supporting a broader market rebound despite ongoing rate-hike and AI-disruption concerns.

Analysis

The key market mechanism is not the absolute size of any one EPS beat; it is whether these names can convert cautious positioning into a squeeze while restoring confidence that capex and consumer demand are not peaking. If the large-cap AI complex prints cleanly, the first-order beneficiaries are the short-interest names themselves, but the second-order read-through is broader: it would validate continued cloud spend, ease multiple pressure on mega-cap tech, and support suppliers with higher operating leverage such as semis, networking, and power infrastructure.

Alphabet and Nvidia matter most for sector leadership. A credible beat from GOOGL would likely compress the market’s perceived risk around AI monetization versus spend, helping adjacent software and internet names that have been sold as “capex losers.” NVDA is a different setup: the stock does not need blowout numbers, it needs evidence that demand is broad enough to offset the recent rotation into memory and other chip beneficiaries; otherwise relative performance can lag even in a strong tape.

NFLX and BKNG are more about factor rotation than fundamentals. Their setup is strongest if management commentary shows resilience in discretionary spend and no meaningful air pocket in 2H guidance; that would support consumer internet multiples and hurt the bear case on travel-demand elasticity. The contrarian risk is that investors are over-indexing to short-covering: if beats are merely in-line-to-slightly-above and guide quality is conservative, the crowded longs may fade quickly after the first 24-48 hours, especially if rates back up or AI capex skepticism returns.

Key Decisions for Investors

• Tactically long GOOGL into earnings via a 1-2 month call spread; thesis is multiple re-rating if AI spend translates into cleaner monetization and FCF holds. Falsify on any guide that implies margin compression or slower ad growth.
• Use NVDA as a relative-value long versus SOXX rather than an outright chase: if the print confirms demand breadth, NVDA should outperform the index; if it only matches expectations, downside is cushioned but upside is capped.
• Pair long NFLX / short XLC for 2-4 weeks only if you expect a short-covering move across consumer internet; exit if management commentary suggests slower subscriber monetization or weaker 2H engagement.
• Watch BKNG as a sentiment barometer for discretionary travel; prefer a small long only after the call if guidance holds. Falsify the trade if forward bookings or ADR commentary softens, because that would hit ABNB/EXPE as well.
• If the first few mega-cap reports disappoint on spend efficiency, fade the group with a short basket of the most crowded AI proxies rather than the four names alone; the market is pricing a relief rally, so any earnings miss should have asymmetric downside.