Q4 earnings season, which will wrap up soon, is once again coming in better than expected. The season officially ends this week, when Nvidia (NVDA) reports.
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Preliminary 4Q2025 Earnings and Margin Results
So far, 10 out of 16 sectors for Q4 are on pace for positive earnings growth, 4 of which are on track for double-digit growth (Tech, Aerospace, Energy, and Finance). But that leaves 6 sectors expecting EPS declines. Like any earnings season, there will be distinct winners and losers. And it’s imperative to know which is which.
So far, 379 S&P 500 companies have reported 4Q 2025 earnings. Total earnings for these 379 companies are up 12.6% from the same period last year, on 8.8% higher revenues, with 74.9% beating consensus EPS estimates.
Margins have been under pressure since the first quarter of 2022, reflecting the cost pressures that were also driving inflation in the broader economy. The trend of margin compression appears to have run its course, with the year-over-year change turning positive in 2023 Q3 and the improving trend continuing through these results as well.
Q4 earnings are above the year-earlier level in 10 of the 16 sectors, with the two largest contributors (Tech and Finance) accounting for more than 50% of total S&P 500 earnings. The Tech sector has been a key driver of aggregate growth over the last couple of years, but the Finance sector is starting to resume its growth role.
In the Tech sector, Q4 earnings for companies that have reported results are up 17.3%. For the Finance sector, we now have Q4 results from 89.4% of S&P 500 companies. Total earnings for these Finance companies are up 26%.
4Q2025 Estimate Revisions
The other sectors enjoying favorable estimate revisions include Industrial Products, Aerospace, Utilities, and Business Services. On the negative side, estimates remain under pressure across the remaining 10 sectors, with declines in Energy, Consumer Discretionary, Construction, Autos, Medical, and Conglomerates.
The tens of billions of dollars that the likes of Microsoft, Alphabet, Amazon, and other mega-cap Tech companies are spending on new data centers to stay on the cutting edge of the AI race have been a boon to the macroeconomy.
The financial health of businesses and households still remains very healthy. While a slice of the consumer economy is under stress due to cumulative inflation, particularly at the lower end of the income distribution, the overall consumer spending environment remains stable, as companies have said on recent earnings calls.
Mark Notes
The results show that the business climate remains favorable and the economy is expanding. The current bull market began on October 12, 2022, and has seen the S&P 500 rise 92.5%. Going back to the 1930s, there have been 14 bull markets, each lasting, on average, 4 years. The longest being the bull market that started in March 2009 and lasted until the pandemic-induced bear market of 2020.
New to investing? These explanations may help:
• Understanding Earnings Season
• Risk Categories & Diversification
This article is for general informational and educational purposes only. It is not intended as financial advice, investment guidance, or a recommendation to buy or sell any security. The content reflects publicly available information and broad market commentary. Readers should conduct their own research and consult a licensed financial professional before making investment decisions.