Earnings growth for the S&P 500 is expected to be up 7.4% in Q4 2024, driven largely by the Tech sector's 14.6% growth. Excluding Tech, earnings growth would be only 4.0%. However, earnings growth is expected to broaden beyond Tech in 2025, with nine of 16 sectors expected to see double-digit growth, leading to an overall earnings growth of 12.3% excluding Tech. Earnings estimates for Q4 have declined since the quarter began, but the pace of negative revisions is less than in Q3, and the outlook for 2025 remains positive.
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
Tech Driving Earnings Growth
The Tech sector has been a significant growth driver in recent quarters, and the trend is expected to continue in 2024 Q4 and beyond. For Q4, Tech sector earnings are expected to be up +14.6% from the same period last year on +10% higher revenues, the 6 th quarter in a row of double-digit earnings growth.
This would follow the sector’s +22.5% earnings growth on +11% higher revenues in 2024 Q3. As the chart below shows, the sector’s growth trajectory is expected to continue in the coming quarters.
In addition to the Tech sector’s strong growth profile, the sector is also among the few sectors whose earnings outlook is steadily improving. This shows up in the revisions trend that remains positive for the Tech sector, both for Q4 and full year 2025.
Take the examples of Nvidia NVDA and Meta Platforms META. The current Q4 Zacks Consensus EPS estimate for Nvidia of 84 cents is up from 78 cents two months back. The same consensus EPS estimate for Meta of $6.76 has increased +7.1% over the last two months.
The chart below shows the Q4 aggregate revisions trend for the Zacks composite proxy for the Tech sector.
The Earnings Big Picture
The chart below shows expectations for 2024 Q4 in the context of what was actually achieved in the preceding four periods and what is currently expected for the next three quarters.
Estimates for 2024 Q4 have declined since the quarter got underway, but the pace and magnitude of negative revisions is less than we had seen in the comparable period of Q3. You can see this in the chart below that shows how Q4 estimates have evolved in recent weeks.
The chart below shows the overall earnings picture on an annual basis.
As you can see, the expectation is for double-digit earnings growth in each of the next two years, with the number of sectors enjoying strong growth notably expanding from the narrow base we have been seeing lately.
Tech sector earnings are expected to be up +17.4% in 2025, which would follow the sector’s +19.8% earnings growth in 2024. But even excluding the Tech earnings, S&P 500 earnings would be up +12.3% in 2025, with nine of the 16 Zacks sectors expected to enjoy double-digit earnings growth.
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