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The recent Costco (COST - Free Report) and AutoZone (AZO - Free Report) quarterly releases kick-started the 2025 Q1 earnings season. We have another four S&P 500 members on deck to report Q1 results this week, including Oracle (ORCL - Free Report) on Monday, March 10th, and Adobe (ADBE - Free Report) on Wednesday, March 12th.
The earnings reports from Costco and AutoZone, as well as this week’s reports from Oracle and Adobe, are for their respective fiscal quarters ending in February, which we and other research organizations count as part of the overall March-quarter, or Q1 tally. By the time the big banks come out with their quarterly results about a month from now, we will have such Q1 results from almost two dozen S&P 500 members.
Regular readers of our earnings commentary are familiar with our favorable view of corporate profitability. The growth pace has been steadily accelerating in recent quarters, with the preceding quarter’s +14.6% earnings growth rate (+17.3% on an ex-Energy basis) reaching its highest level in three years.
We believe these favorable growth trends will remain in place in the current and coming quarters, with the sectors contributing to the growth momentum expanding beyond the Tech core of the last couple of years.
We are mindful of the potential negative macroeconomic effects of policy uncertainty, which appears to have also started showing up in some of the sentiment measures. The guidance downgrades from several retailers in recent days, where they cited tariffs and other sources of uncertainty, could very well be an early sign of a downshift in the earnings picture. We have been experiencing a relatively elevated magnitude of negative revisions to estimates for the current period (2025 Q1) even before the more recent signs of weakness in data, as we will share here a little later.
The expectation is that Q1 earnings will be up +6.2% from the same period last year on +3.8% higher revenues, which would follow the +14.6% earnings growth on +5% revenue gains in the preceding period.
The chart below shows current earnings and revenue growth expectations for 2025 Q1 in the context of where growth has been over the preceding four quarters and what is currently expected for the following three quarters.
Image Source: Zacks Investment Research
The chart below shows how Q1 earnings growth expectations have evolved since the quarter got underway.
Image Source: Zacks Investment Research
As noted earlier, there have been more negative revisions to Q1 estimates since the start of January compared to the comparable periods of the preceding few quarters. Not only is the magnitude of negative revisions to Q1 estimates more pronounced relative to the last few quarters, but it is also more widespread.
Since the start of the period in January, estimates have come down for 14 of the 16 Zacks sectors, with the biggest declines for the Conglomerates, Autos, Basic Materials, Aerospace, Consumer Discretionary, and others.
Medical and Construction are the two sectors whose Q1 estimates have increased since the quarter got underway.
The Tech sector, whose estimates have consistently been positive over the past year, is also suffering negative revisions to Q1 estimates. Optimism about the AI investment cycle suffered a psychological blow following China’s DeepSeek announcement. The resulting shift in market sentiment has weighed on the space ever since, causing the underperformance of AI-focused stocks this year.
You can see this in the performance of Oracle and Adobe that are reporting this week, as shown in the chart below of the year-to-date performance of these two stocks relative to the market (S&P 500 index) and the Zacks Tech sector.
Image Source: Zacks Investment Research
Oracle is expected to report $1.48 per share in earnings on $14.36 billion in revenues, representing year-over-year changes of +5% and +8.1%, respectively. Estimates have been stable over the past month, but have declined relative to where they were two- and three-months back. Oracle has emerged as a major player in the AI space itself, which accounts for the stock’s recent underperformance. Looking at the stock’s performance over a more extended period, Oracle shares are still standout outperformers.
Unlike Oracle, Adobe shares have held up better in the ongoing market pullback, but have otherwise been laggards over the past year. Over the past year, Adobe shares are down -18.9% vs. a +38.1% gain for Oracle, a +13.1% gain for the S&P 500 index, and an +11.1% gain for the Zack Tech sector. Adobe shares were down following the last two quarterly releases; estimates have stabilized since the quarter began.
A lot will be riding on the evolving earnings expectations for the Tech sector, which has been a pillar of growth over the last two years. The expectation is for Q1 earnings for the sector to be up +12.5% from the same period last year on +10% higher revenues, which will follow the sector’s +26.3% earnings in the preceding period.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on a calendar-year basis, with double-digit earnings growth expected in 2025 and 2026.
Image: Bigstock
Previewing the 2025 Q1 Earnings Season
The recent Costco (COST - Free Report) and AutoZone (AZO - Free Report) quarterly releases kick-started the 2025 Q1 earnings season. We have another four S&P 500 members on deck to report Q1 results this week, including Oracle (ORCL - Free Report) on Monday, March 10th, and Adobe (ADBE - Free Report) on Wednesday, March 12th.
The earnings reports from Costco and AutoZone, as well as this week’s reports from Oracle and Adobe, are for their respective fiscal quarters ending in February, which we and other research organizations count as part of the overall March-quarter, or Q1 tally. By the time the big banks come out with their quarterly results about a month from now, we will have such Q1 results from almost two dozen S&P 500 members.
Regular readers of our earnings commentary are familiar with our favorable view of corporate profitability. The growth pace has been steadily accelerating in recent quarters, with the preceding quarter’s +14.6% earnings growth rate (+17.3% on an ex-Energy basis) reaching its highest level in three years.
We believe these favorable growth trends will remain in place in the current and coming quarters, with the sectors contributing to the growth momentum expanding beyond the Tech core of the last couple of years.
We are mindful of the potential negative macroeconomic effects of policy uncertainty, which appears to have also started showing up in some of the sentiment measures. The guidance downgrades from several retailers in recent days, where they cited tariffs and other sources of uncertainty, could very well be an early sign of a downshift in the earnings picture. We have been experiencing a relatively elevated magnitude of negative revisions to estimates for the current period (2025 Q1) even before the more recent signs of weakness in data, as we will share here a little later.
The expectation is that Q1 earnings will be up +6.2% from the same period last year on +3.8% higher revenues, which would follow the +14.6% earnings growth on +5% revenue gains in the preceding period.
The chart below shows current earnings and revenue growth expectations for 2025 Q1 in the context of where growth has been over the preceding four quarters and what is currently expected for the following three quarters.
Image Source: Zacks Investment Research
The chart below shows how Q1 earnings growth expectations have evolved since the quarter got underway.
Image Source: Zacks Investment Research
As noted earlier, there have been more negative revisions to Q1 estimates since the start of January compared to the comparable periods of the preceding few quarters. Not only is the magnitude of negative revisions to Q1 estimates more pronounced relative to the last few quarters, but it is also more widespread.
Since the start of the period in January, estimates have come down for 14 of the 16 Zacks sectors, with the biggest declines for the Conglomerates, Autos, Basic Materials, Aerospace, Consumer Discretionary, and others.
Medical and Construction are the two sectors whose Q1 estimates have increased since the quarter got underway.
The Tech sector, whose estimates have consistently been positive over the past year, is also suffering negative revisions to Q1 estimates. Optimism about the AI investment cycle suffered a psychological blow following China’s DeepSeek announcement. The resulting shift in market sentiment has weighed on the space ever since, causing the underperformance of AI-focused stocks this year.
You can see this in the performance of Oracle and Adobe that are reporting this week, as shown in the chart below of the year-to-date performance of these two stocks relative to the market (S&P 500 index) and the Zacks Tech sector.
Image Source: Zacks Investment Research
Oracle is expected to report $1.48 per share in earnings on $14.36 billion in revenues, representing year-over-year changes of +5% and +8.1%, respectively. Estimates have been stable over the past month, but have declined relative to where they were two- and three-months back. Oracle has emerged as a major player in the AI space itself, which accounts for the stock’s recent underperformance. Looking at the stock’s performance over a more extended period, Oracle shares are still standout outperformers.
Unlike Oracle, Adobe shares have held up better in the ongoing market pullback, but have otherwise been laggards over the past year. Over the past year, Adobe shares are down -18.9% vs. a +38.1% gain for Oracle, a +13.1% gain for the S&P 500 index, and an +11.1% gain for the Zack Tech sector. Adobe shares were down following the last two quarterly releases; estimates have stabilized since the quarter began.
A lot will be riding on the evolving earnings expectations for the Tech sector, which has been a pillar of growth over the last two years. The expectation is for Q1 earnings for the sector to be up +12.5% from the same period last year on +10% higher revenues, which will follow the sector’s +26.3% earnings in the preceding period.
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on a calendar-year basis, with double-digit earnings growth expected in 2025 and 2026.
Image Source: Zacks Investment Research
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> Analyzing Retail Earnings in a High-Tariff Economy