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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:

• Total Q1 earnings for the 419 S&P 500 members that have reported results are up +12.2% from the same period last year on +4.1% higher revenues, with 73.7% beating EPS estimates and 61.8% beating revenue estimates.

• We continue to believe that this earnings season is less about what companies earned in the first quarter of 2025 and more about sizing up the earnings impact of the uncertain macroeconomic backdrop. This is starting to show up in declining estimates for the coming periods.  

• For 2025 Q2, total S&P 500 earnings are expected to be up +6.4% from the same period last year on +3.9% higher revenues. Estimates for the period have been coming down more than had been the case in the comparable periods of other recent quarters.

• Q2 earnings estimates for the Tech sector appear to have reversed course over the last two weeks, with estimates starting to go back up after steadily coming down earlier.

What’s Happening to 2025 Q2 Earnings Estimates?

The start of Q2 coincided with heightened tariffs uncertainty following the punitive April 2^nd tariff announcements. While the onset of the announced levies was eventually delayed for three months, the issue has understandably weighed heavily on estimates for the current and coming quarters.

The expectation at present is for Q2 earnings for the S&P 500 index to increase by +6.4% from the same period last year on +3.9% higher revenues. The chart below shows how Q2 earnings growth expectations have evolved since the start of the year.

Image Source: Zacks Investment Research

While it is not unusual for estimates to be adjusted lower, the magnitude and breadth of the Q2 estimate cuts are greater than we have seen in the comparable periods of other recent quarters.

Since the start of the quarter last month, estimates have come down for 13 of the 16 Zacks sectors, with the biggest declines for the Transportation, Autos, Energy, Construction, and Basic Materials sectors.

Estimates for the two largest earnings contributors to the index – Tech & Finance – have also declined since the quarter got underway.

Tech sector earnings are expected to be up +12.8% in Q2 on +9.9% higher revenues. While these earnings growth expectations are materially below where they stood at the start of April, the revisions trend appears to have notably reversed in recent days. You can see this reversal in the sector’s revisions trend in the chart below.