US Stock Q4 Earnings Season Preview: Market Expectations Low or Surprises Ahead, AI Trades and Tech Giants Face Tests
A new round of US stock earnings season is set to officially kick off this week. As usual, Wall Street financial giants such as Goldman Sachs, Morgan Stanley, and JPMorgan Chase will "lead the charge," successively releasing their Q4 2025 earnings reports.
Q4 "Report Card" Expected to Exceed Expectations
Overall, Goldman Sachs anticipates that S&P 500 constituent companies will continue to deliver strong performances, surpassing general market expectations. In a latest report, analyst Ben Snider told clients that the market generally expects "a 7% year-over-year growth in S&P 500 earnings per share for Q4 2025," but he believes this forecast "seems overly conservative once again."
"In the first three quarters of 2025, S&P 500 earnings per share grew by 10% or more, outperforming analysts' expectations by an average of 6 percentage points," he added.
Snider stated that revenue growth should also exceed analysts' expectations. The market generally anticipates 6% growth, but he estimates that Q4 US nominal GDP growth exceeding 5%, combined with a 7% year-over-year depreciation in the trade-weighted dollar, could boost S&P 500 revenue growth by "about 2 percentage points."
He also expects only modest growth in corporate profit margins for the fourth quarter, with gains from operational leverage offset by adverse impacts from tariffs.
Additionally, HSBC pointed out that market expectations for earnings per share growth are slowing, but Q4 earnings could bring surprises.
In its latest report, the bank noted that the market generally expects earnings growth to slow to 8% in the fourth quarter after four consecutive quarters of double-digit growth. However, similar predictions in past quarters were ultimately exceeded, with profit margins continuously improving (most recently outperforming by 6 percentage points).
HSBC anticipates that with rising corporate guidance and market sentiment indicators, the fourth-quarter earnings will still deliver earnings surprises.
Citigroup also expects the Q4 earnings season to exceed expectations. Specifically, the bank pointed out that S&P 500 constituent companies' performances will outperform market expectations by about 4%, pushing the total 2025 constituent earnings per share to $275.
"Given the current valuation environment, investors' focus will be on forward-looking commentary released alongside the results, especially the trajectory of 2026 earnings per share.
Driven by macroeconomic factors such as labor productivity, industrial production, housing starts, and stable inflation dynamics, upward revisions to 2026 corporate earnings per share expectations are crucial for maintaining a bullish stance on US stocks," the bank's analysts wrote in the report.
Bank Stocks "Very Critical"
As the first major earnings season of 2026 approaches, the financial sector's attention is focused on Wall Street giants. America's largest bank, JPMorgan Chase, will "take the lead" before the market opens on Tuesday, with financial giants like Citigroup, Bank of America, and Goldman Sachs following closely.
Analysts believe this period will be a key test of the resilience of the US banking industry. Given the Federal Reserve's recent shift to a more accommodative monetary policy, the upcoming earnings from industry leaders will provide important information to the market, helping to understand how America's largest financial institutions balance narrowing net interest margins with rebounds in merger and acquisition deals and loan demand.
Moreover, these banks' performances not only reflect the profitability of the financial sector itself but are also seen as a "barometer" of US consumer health. The market generally expects financial sector earnings to grow by about 7% year-over-year, but what truly determines market reactions are detailed data such as credit card delinquency rates and loan loss provisions.
Analysts point out that consumer spending accounts for more than two-thirds of US GDP, and if delinquency rates rise, it could signal increasing household financial pressures and weakening consumption capacity.
Finally, these financial giants' performances and management's outlook for future results will have a significant impact on US stocks and even global markets. Therefore, whether the latest report cards can "add fuel to the fire" or "pour cold water" on the market is being watched with bated breath. Overall, market sentiment remains positive.
Moody's, one of the three major international credit rating agencies, recently stated that it expects these banks' profitability to improve overall. In a new report, the rating agency noted that the Q4 performances of globally operating banks headquartered in the US will be stronger than the same period last year.
Moody's indicated that it expects "steady growth in debt underwriting and equity trading revenues in the fourth quarter, a slight decline in equity underwriting and advisory revenues, and stable fixed income, currency, and commodities (FICC) trading revenues."
Goldman Sachs released a latest report stating that the outlook for US bank stocks in 2026 is "constructively positive," and it is optimistic about the upcoming Q4 earnings season.
The bank anticipates strong performances from Wall Street financial giants like JPMorgan Chase, laying a major foundation for the continued earnings expansion trend in the Q4 earnings season and the continuation of the US stock bull market into 2026.
"Entering 2026, the large bank sector in the US stock market is on a 'more tailwind, more sustainable' earnings path. Current market consensus expectations may significantly underestimate the strong growth resilience in net interest income (NII) and investment banking, wealth management, and equity asset trading businesses," the report stated.
Tech Sector Faces Tests
Following the banking sector, tech giants will take the stage one after another: Next week, heavyweights like Netflix and Intel will release earnings consecutively; then Apple, Microsoft, Tesla, and others will report in the last week of January; finally, tech giants like Google, Amazon, and Nvidia will disclose earnings successively from late January to early February.
In the aforementioned report, Goldman Sachs' Snider pointed out that the fourth quarter is "another important test for large tech companies and AI trades," expecting hyperscale data center capital expenditure growth to slow sharply from "75% in the third quarter to 54% in the fourth quarter, and down to 24% by the end of 2026."
He added that corporate applications of AI's contribution to earnings will be a "key focus for investors" during the earnings season.
Notably, TSMC's earnings release before the market opens on January 15 is also a focal point for the tech sector. Driven by the AI wave, the market has high expectations for its revenue growth, with multiple investment banks raising target prices. As a bellwether for the global semiconductor supply chain, TSMC's performance not only affects tech stock sentiment but also reflects the activity in global capital expenditures and technological innovation.
Analysts point out that if its earnings fulfill the AI-driven logic, it could further reinforce the tech stocks' leading pattern; conversely, it may trigger adjustments in the high-valuation sector.
HSBC believes that although it expects "earnings surprises" this quarter, the bar is higher, especially for the "Magnificent Seven" tech stocks, financials, and healthcare.
The bank added that key points to watch this earnings season include: AI capital expenditures and growth momentum, 2026 performance guidance/outlook, and profit margin guidance (tariff pressures or AI efficiency improvements).