Tech Earnings Estimates Increase Again: What's Going On?

Core Insights - The current earnings estimates for Q2 2025 for the S&P 500 index indicate a growth of +6.4% year-over-year, driven by a +3.9% increase in revenues [3][5] - The earnings season is more focused on assessing the impact of macroeconomic uncertainties rather than just the Q1 earnings results [5][20] - There has been a notable decline in earnings estimates across various sectors, particularly in Transportation, Autos, Energy, Construction, and Basic Materials [6] Earnings Performance - Total Q1 earnings for 419 S&P 500 members that have reported are up +12.2% from the same period last year, with 73.7% beating EPS estimates and 61.8% beating revenue estimates [5] - The Tech sector's earnings are expected to grow by +12.8% in Q2 with +9.9% higher revenues, although these expectations have decreased since early April [7][11] Sector-Specific Trends - The Tech sector has recently seen a reversal in earnings estimate trends, with notable improvements in estimates for major companies like Microsoft, Alphabet, and Meta [11][12] - Despite the overall downward trend in estimates, the recent adjustments in the Tech sector suggest a potential recovery in earnings expectations [11][12] Future Outlook - There is an expectation for further downward adjustments in earnings estimates as the impact of tariffs becomes more evident in economic data [20] - The modestly negative GDP read for Q1 reflects anticipatory effects of the trade regime, indicating that companies are preparing for the new levies [20]