Tech Sector Earnings Estimates Show Signs of Recovery

For Immediate Release

Chicago, IL – May 8, 2025 – Zacks Director of Research Sheraz Mian comments, “Q2 earnings estimates for the Tech sector appear to have reversed course in the past two weeks, with estimates beginning to rise after previously declining.”

Understanding the Recent Increase in Tech Earnings Estimates

Note: The following is an excerpt from this week’s Earnings Trends report, which includes detailed historical actuals and estimates for current and upcoming periods. For the full report, please Click here >>>

Key Highlights

• Total Q1 earnings for 419 S&P 500 companies that have reported results increased by 12.2% compared to the previous year, accompanied by a 4.1% rise in revenues. Of these, 73.7% exceeded EPS estimates, and 61.8% outperformed revenue projections.
• This earnings season is less about the performance in Q1 2025 and more focused on understanding how the uncertain macroeconomic climate affects future earnings, resulting in declining estimates for upcoming periods.
• For Q2 2025, total S&P 500 earnings are forecasted to grow by 6.4% from last year, driven by a 3.9% increase in revenues. Recent estimates have been adjusted downward more significantly than in prior quarters.
• Tech sector earnings estimates have shown a recent rebound, reversing their downward trend over the last two weeks.

Analyzing 2025 Q2 Earnings Estimates

The beginning of Q2 coincided with rising uncertainty around tariffs following announcements made on April 2^nd. While the implementation of these tariffs was delayed for three months, the situation has weighed heavily on earnings estimates for both the current and upcoming quarters.

Currently, the outlook for Q2 earnings of the S&P 500 index indicates a 6.4% increase from the same period last year, alongside a 3.9% rise in revenues.

Unusual adjustments have occurred, as 13 of the 16 Zacks sectors have seen estimates reduced, particularly in the Transportation, Autos, Energy, Construction, and Basic Materials sectors.

Moreover, estimates for the major earnings contributors, Tech and Finance, have also slumped since the quarter commenced.

Tech sector earnings are expected to rise by 12.8% in Q2, supported by 9.9% higher revenues. Although these growth expectations are significantly lower than earlier in April, revisions have shown a marked improvement recently.

Last week’s report highlighted this positive shift in Tech sector estimates, particularly amid strong performance from key players, including Microsoft, Alphabet, and Meta.

The current Q2 Zacks Consensus EPS estimate for Alphabet is $2.12, down from $2.15 on April 4^th but up from $2.08 on April 25^th and $2.07 a week prior. Likewise, Meta’s Q2 EPS estimate stands at $5.84, down from $5.94 on April 4^th but up from $5.70 on May 2^nd and $5.51 on April 25^th. Microsoft has experienced a similar pattern in its estimates, with a modest increase compared to early April figures.

Monitoring these developments in Tech sector estimates will be crucial in the upcoming weeks.

The Broader Earnings Context

While this year’s estimates have been revised downward recently, there have been minimal changes to projections for the following two years.

Given ongoing concerns regarding economic growth, further reductions in estimates are likely as the impact of tariffs becomes evident in upcoming data.

The slight contraction in GDP for the first quarter reflected anticipatory effects of the trade regime, as importers prepared for the upcoming tariffs.

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