Earnings Outlook Steadily Improves: Mag 7 Earnings Loom

Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

• The picture emerging from the Q2 earnings season, with almost 40% of the results already in, is one of strength and steady improvement. Not only are an above-average proportion of companies beating consensus estimates, but estimates for the current and coming periods are also going up.

• For the 198 S&P 500 companies that have already reported Q2 results, total earnings are up +7.0% from the same period last year on +5.5% higher revenues, with 82.8% beating EPS estimates and 79.8% beating revenue estimates.

• For the Tech sector, we now have Q2 results from 22.4% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Tech companies are up +15.2% from the same period last year on +10.6% higher revenues, with 90.9% beating EPS estimates and 100% beating revenue estimates.

• For the Finance sector, we now have Q2 results from 64.5% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Finance companies are up +17.6% from the same period last year on +5.8% higher revenues, with 90.0% beating EPS estimates and 76.0% beating revenue estimates.

An Emerging Positive Estimate Revisions Trend

Regular readers of our earnings commentary are familiar with a persistently negative revisions trend that has been in place since the start of the year, with the unfavorable trend accelerating at the beginning of Q2 with the Trump administration’s tariff announcements.

The revisions trend notably stabilized as we have gone through Q2 and has actually started turning positive in recent days. You can see this in the 2025 Q3 revisions trend below.

Since the start of Q3 this month, estimates have modestly increased for half of the 16 Zacks sectors, including Finance, Tech, Energy, Consumer Discretionary, Autos, and others.

On the negative side, Q3 estimates are still under pressure for the other 8 Zacks sectors, with significant declines to estimates for the Medical, Basic Materials, Construction, Transportation, and other sectors.

For the Tech sector, Q3 earnings are expected to be up +8.0% from the same period last year on +11.2% higher revenues. The chart below shows how the sector’s Q3 earnings growth expectations have evolved over the last couple of months.

You can look at Q3 estimates for Tech players like Meta Platforms META, Nvidia NVDA, and others.

Meta, which reports Q2 results on July 30^th, is currently expected to bring in $5.92 per share in earnings in Q3. Estimates for Meta have been on a steady uptrend, with the current $5.92 EPS estimate increasing by +1.2% over the past week and +2.6% over the past month. Nvidia, which will be the last Mag 7 company to report Q2 results on August 27^th, is expected to earn $1.60 per share in Q3, up +0.9% over the past week and +1.8% over the past month.

This positive revisions trend is even more notable for the big banks and brokers like JPMorgan, Citigroup, Goldman Sachs, and others in the Finance sector. 

Earnings Expectations for 2025 Q2 & Beyond

The positive results from almost 40% of S&P 500 members have helped push the Q2 earnings growth expectation higher, with earnings for the S&P 500 index now expected to increase by +7.6% from the same period last year on +5.2% higher revenues

The chart below shows expectations for 2025 Q2 in terms of what was achieved in the preceding four periods and what is currently expected for the next three quarters.

The chart below shows the overall earnings picture for the S&P 500 index on an annual basis.

We have been pleasantly surprised by the aforementioned favorable revisions trend, which validates the market’s rebound from the April lows. Given the positive run of Q2 results, it will make sense for this trend to remain in place over the coming weeks as we go through this reporting cycle.

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This article originally published on Zacks Investment Research (zacks.com).

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