Costco and AutoZone Propel 2025 Q1 Earnings Season Insights

Costco and AutoZone recently reported quarterly results, hinting at 2025 Q1 earnings shifts. Expectations are muted, with increased revisions reflecting potential macroeconomic pressures influencing stock performances.

Date: 08-03-2025

AI Rating: 5

Earnings Expectations Reviewed: The reports from Costco and AutoZone have raised concerns regarding the earnings picture for the upcoming quarters. The growth in earnings has been noteworthy, recording a rate of +14.6% in the preceding quarter, which is the highest in three years. For 2025 Q1, estimates suggest earnings growth will decelerate to +6.2% compared to the same period last year, with revenues expected to increase by +3.8%.

Negative Revisions Impact: Since January, negative revisions for Q1 estimates have outpaced prior quarters, signaling an emerging trend of uncertainty within various sectors, including Tech, Autos, and Consumer Discretionary. This broad adjustment reflects policy uncertainties, notably tariffs, which have begun to weigh on sentiment and projections.

Tech Sector Under Pressure: Despite being a stalwart of recent growth, the Tech sector is now confronting negative estimates, particularly with companies like Oracle and Adobe experiencing underperformance. For Oracle, despite a stable estimate for earnings at $1.48 per share, the guidance has diminished from earlier months. Adobe's performance has also declined year-over-year, albeit it's seen some stability recently, demonstrating mixed prospects for these key players.

Sector Outlook: The report indicates a pessimistic outlook with expectations for sectors like Conglomerates and Basic Materials seeing larger declines in estimates. While Medical and Construction sectors show some resilience with increased estimates, the broader market sentiment is leaning towards caution, especially as AI and Tech-related stocks struggle to maintain their earlier momentum.

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