Wells Fargo's Kwon predicts upside earnings season surprise

Group 1 - The upcoming earnings season is forecasted to have a 4% beat, primarily driven by AI semiconductor companies [2] - Consensus earnings per share (EPS) estimates for Q3 have decreased by about 4% since the liberation day, indicating a potentially lower bar for earnings [3] - The impact of tariffs is expected to be more significant in Q4 and Q1, as companies have approximately 65 days of inventory, suggesting that the real effects of tariffs will not be felt until later [4] Group 2 - The analysis utilized a machine learning process examining around 350 macro variables to predict sales and earnings performance [2] - There is a debate regarding whether the current market rally is justified, given that EPS estimates did not see the usual cuts prior to earnings [3] - The inventory situation indicates that pre-tariff inventories will deplete by mid-October to November, aligning with the anticipated impact of tariffs [4]