A Closer Look at Earnings Expectations for Q1 & Full-Year 2025

Core Insights - The March-quarter earnings season is set to begin with major banks reporting on April 11th, but early results from companies with February-ending fiscal quarters have been mixed, with notable names like Costco, Oracle, and Adobe reporting [2][4] - Market participants are concerned about the guidance provided by these companies, reflecting broader macroeconomic worries [3][4] Earnings Performance - Oracle reported a miss on both revenue and earnings, although it showed growth momentum in its backlog; however, its outlook for margins and capital expenditures raised concerns [4] - Adobe exceeded earnings and revenue estimates, but its guidance indicated a deceleration in growth, particularly in AI initiatives [4] - Overall, Q1 earnings for the S&P 500 are expected to rise by 6.1% year-over-year, with revenues increasing by 3.7%, a decrease from earlier estimates of 10.4% growth at the start of January [6][13] Sector Analysis - The Tech sector continues to be a significant growth driver, with expected earnings growth of 12.7% and revenue growth of 10.0% for Q1, marking the seventh consecutive quarter of double-digit earnings growth [8][9] - Despite a strong outlook, recent data indicates that estimates for the Tech sector have come under pressure since January, although they remain positive for the full year [10][16] Broader Market Trends - The revisions trend for Q1 earnings estimates has been broad-based, with 15 out of 16 sectors experiencing cuts, with the exception of the Medical sector [16] - Significant cuts to estimates have been noted in sectors such as Conglomerates, Aerospace, Construction, and Basic Materials [16] - For 2025, nearly all sectors are expected to see earnings growth, with six sectors projected to achieve double-digit growth, indicating a more diversified growth landscape compared to previous years [18]