Q1 Earnings Guidance Dims Amid Growing Tariff Concerns

The upcoming Q1 earnings season is marked by heightened concerns related to tariffs and economic factors, complicating earnings outlooks. Major players like Delta and Walmart may adjust forecasts, highlighting investor caution.

Date: 10-04-2025

AI Rating: 5

Impact of Tariffs and Uncertainty on Earnings: The earnings guidance for the upcoming Q1 2025 is significantly affected by an uncertain macroeconomic backdrop, particularly due to tariffs. This has led to pre-announcements and guidance withdrawals by companies such as Delta Air Lines and Walmart, indicating potential significant adjustments in their earnings forecasts.

Overall Earnings Expectations: Despite the current turmoil, total earnings for the S&P 500 for Q1 2025 are projected to increase by approximately +5.8% compared to the same period last year, backed by a +3.8% uptick in revenues. This follows an impressive +14.1% earnings growth and +5.7% revenue growth from the last quarter, showing resilient growth patterns in a challenging environment.

Sector Performance Insights: Notably, various sectors are expected to show varying performance. The Tech sector, which has been a consistent growth driver, is expected to achieve a +12.5% growth year-over-year in earnings, with +10.2% higher revenues. This trend represents the seventh consecutive quarter of double-digit earnings growth for the sector, indicating strong underlying demand and innovation. In contrast, the guidance trends for sectors like Transportation and Utilities are less optimistic, signaling potential headwinds.

Investor Considerations: With potential rollbacks in earnings guidance, analysts suggest that many companies may lower expectations for the upcoming quarters, contributing to downward revisions in estimates. This shifting sentiment could affect stock prices adversely. Investors should remain cautious and focus on sectors with upward earnings revisions and robust growth potential while keeping an eye on the overall impact of tariffs and economic conditions on corporate profitability.

Stocks: DAL WMT