Earnings season wrapping up on a high note
Second quarter earnings season is winding down, but earnings are up, and better than expected. Despite some potentially concerning signals from the real economy, including muted job gains, and possible seasonal volatility, we remain constructive on equities. A positive second quarter earnings season strengthens our conviction.
3 mins Reading time
Published on 11 August 2025
Second quarter earnings season is winding down, and results have delighted many investors. More than 90% of S&P 500 companies have already reported and 82% beat estimates, the highest rate in four years. Once all data comes in, earnings are expected to have grown 11.7% compared to 4.9% projected at the end of June.
Additionally, estimates for the full year have also improved; consensus estimates call for 10.2% annual earnings growth, up from 8.7% in June. Despite signs of potential weakness in the real economy and job market, earnings have been better than anticipated.
Historically, August and September have been seasonally challenging months, suggesting we could see an increase in volatility in the near term, but the ongoing strength of earnings instills us with confidence in equity performance over the long term. We also remain positive on the artificial intelligence (AI) growth story, which bolstered the results of Magnificent Seven companies this past quarter. The innovation’s benefits are not only affecting technology companies; AI is driving margin expansion and productivity enhancements across many other sectors too, further supporting our constructive stance on the future outlook of the U.S. equity market.
787959 Exp : 11 August 2026
YOU MIGHT ALSO LIKE
Earnings growth is on investors’ minds, especially as it broadens beyond the big tech stocks that have shown the most improvement in the past. We believe this is a positive sign for continued equity gains.
The S&P 500 is trading at record highs, which some investors didn’t see coming after the tariff-fueled drop in April. What may come as a bigger surprise, however, is the rally is broadening beyond big technology companies. Let’s examine different measures that prove this point.
Small businesses are becoming more optimistic, a positive indication at a time when economists are debating whether growth will slow. We view this confidence as a positive signal for future growth.
It’s true that the S&P 500 currently exhibits high valuations, with the technology sector alone comprising over 40% of its market capitalization and driving concerns about valuations. Are those high multiples justified?
