The second quarter of 2025 (Q2 2025) earnings season for the S&P 500 has largely concluded, with over 92% of companies reporting results by mid-August 2025. Overall, the performance has been robust, exceeding initial expectations amid economic uncertainties such as tariffs and high valuations. The blended year-over-year (YoY) earnings per share (EPS) growth rate settled around 11-12%, marking the third consecutive quarter of double-digit growth. Revenue growth was more modest at approximately 5-6% YoY. A high percentage of companies beat analyst estimates on both EPS and revenues, with strong contributions from technology-related sectors. However, performance was uneven, with energy and materials sectors lagging. Forward guidance remains optimistic, with many companies raising full-year outlooks, though risks from tariffs and economic slowdowns persist. This report synthesizes data from key financial analyses to provide a comprehensive overview.
Overall Earnings and Revenue Performance
As of August 18, 2025, more than 92% of S&P 500 companies had reported Q2 2025 results, showing an 11% YoY increase in EPS, significantly outperforming the initial analyst expectation of 5% growth (Yahoo Finance, 2025). Earlier updates, such as on August 8, reported a blended EPS growth rate of 11.8% YoY, up from 10.3% the prior week and well above the 4.9% estimated at quarter-end (FactSet Insight, 2025). This rate, if finalized, would represent the highest EPS growth since Q4 2024. Similarly, the DWS tracker as of August 12 indicated a blended EPS of $66.78, reflecting 11.5% YoY growth based on 88% of companies reporting (DWS Group, 2025). State Street’s analysis confirmed a comparable 11.68% blended EPS growth rate with 90.48% of companies reported (State Street Global Advisors, 2025).
Revenue growth was solid but less pronounced, with a blended rate of 6.3% YoY as per August 8 data, potentially the highest since Q3 2022 if sustained (FactSet Insight, 2025). DWS reported a more conservative 4.8% YoY sales growth (DWS Group, 2025). Initial expectations for slower growth were upended by strong corporate results, defying headwinds like tariff impacts and economic uncertainty.
Beats on Estimates
Companies demonstrated strong outperformance relative to analyst forecasts. Approximately 81-82% of reporting firms beat EPS estimates, above the 5-year average of 78-79% and the 10year average of 75% (FactSet Insight, 2025; State Street Global Advisors, 2025; BlackRock iShares, 2025). The aggregate EPS surprise was 8.4% above estimates, though slightly below the 5-year average (FactSet Insight, 2025). DWS noted 77% beating EPS with a 7.4% surprise factor (DWS Group, 2025).On revenues, 80-81% of companies exceeded expectations, surpassing historical averages (FactSet Insight, 2025; State Street Global Advisors, 2025). The aggregate revenue surprise was 2.4-2.7% (FactSet Insight, 2025; DWS Group, 2025). This high beat rate underscores corporate resilience, though market reactions were asymmetric, with EPS misses leading to steeper stock declines (average -10%) compared to beats (+1.5%) (BlackRock iShares, 2025).
On revenues, 80-81% of companies exceeded expectations, surpassing historical averages (FactSet Insight, 2025; State Street Global Advisors, 2025). The aggregate revenue surprise was 2.4-2.7% (FactSet Insight, 2025; DWS Group, 2025). This high beat rate underscores corporate resilience, though market reactions were asymmetric, with EPS misses leading to steeper stock declines (average -10%) compared to beats (+1.5%) (BlackRock iShares, 2025).
Sector Performance
Earnings growth was uneven across sectors, with nine of eleven reporting YoY increases. Technology and communication services led, driven by AI investments and the “Magnificent 7” (Mag 7) stocks, while energy declined sharply. Below is a breakdown based on reported data:
| Sector | EPS Growth (YoY) | Revenue Growth (YoY) | % Beat EPS | Key Notes |
|---|---|---|---|---|
| Communication Services | +45.6% to +48% | +8.2% | 82-83% | Strong margins at 19.1%; significant contributor to overall growth (State Street Global Advisors, 2025; DWS Group, 2025). |
| Information Technology | +21-22% | +15% | 94% | Al-driven; Mag 7 contributed 26% EPS growth vs. 4% for the rest of the index (State Street Global Advisors, 2025; DWS Group, 2025; BlackRock iShares, 2025). |
| Financials | +13% | -2.7% | 86% | Rebound in insurance and capital markets; key surprise contributor (State Street Global Advisors, 2025; FactSet Insight, 2025), |
| Health Care | +7.8-8.2% | +11% | 89% | Slowed from Q1; strength ex-managed care (State Street Global Advisors, 2025; DWS Group, 2025). |
| Consumer Discretionary | +5.3% | N/A | 71% | Deceleration due to tariffs; hospitality resilient (State Street Global Advisors, 2025). |
| Real Estate | +4.3% | +7.2% | 84% | Modest growth (State Street Global Advisors, 2025; DWS Group, 2025). |
| Industrials | +1.0% | N/A | 84% | Offset by weakness in machinery and airlines (State Street Global Advisors, 2025). |
| Consumer Staples | +0.4% | +0.2% | 86% | Marginal improvement (State Street Global Advisors, 2025; DWS Group, 2025). |
| Utilities | -1.9% | +7.4% | N/A | Negative EPS growth (DWS Group, 2025). |
| Materials | -3.8% to 0.6% | +5.4% | 48% | Dragged by chemicals (State Street Global Advisors, 2025; DWS Group, 2025). |
| Energy | -18% to -19% | -5.9% | 76% | Impacted by falling oi! prices (State Street Global Advisors, 2025; DWS Group, 2025). |
The Mag 7 (e.g., Apple, Amazon, Google, Meta, Microsoft, Nvidia, Tesla) were pivotal, with 27.2% EPS growth and 15.5% revenue growth, contrasting with 7.4% and 3.5% for the remaining S&P 500 (DWS Group, 2025). Dispersion within the Mag 7 was notable, with performance varying by 50% between top and bottom performers (BlackRock iShares, 2025).
Notable Trends and Forward Outlook
Key trends include margin expansion to 13.3% (up from 12.4% YoY), driven by efficiency gains (DWS Group, 2025). Tariff impacts were frequently cited, with companies like GM ($1.1 billion hit) and Nike ($1 billion cost increase) highlighting headwinds (DWS Group, 2025; Yahoo Finance, 2025). AI investments remain a growth driver, with hyperscalers forecasting 43% capex growth in 2025 (BlackRock iShares, 2025).
Forward guidance is positive: Nearly 60% of companies raised full-year outlooks, nearly double Q1 rates (BlackRock iShares, 2025). Analysts project Q3 2025 EPS growth at 7.2%, Q4 at 7.0%, and full-year 2025 at 10.3% (FactSet Insight, 2025). However, valuations are elevated, with the forward P/E at 22.1 (above averages), posing risks if growth slows (FactSet Insight, 2025; DWS Group, 2025).
Conclusion
Q2 2025 S&P 500 earnings showcased strength and resilience, with double-digit EPS growth and high beat rates bolstering market confidence. Tech-led sectors propelled results, but laggards like energy highlight vulnerabilities. While the outlook is optimistic, ongoing tariff pressures and valuation concerns warrant caution. Investors should monitor upcoming reports, including key players like Nvidia, for further insights.
References:
- BlackRock iShares. (2025, August). Q2 earnings: Upside surprises & Mag 7 dispersion.
https://www.ishares.com/us/insights/earnings-commentary-q2 - DWS Group. (2025, August 12). S&P 500 EPS tracker: 2Q25 [PDF].
https://www.dws.com/AssetDownload/Index?assetGuid=49221af1-0106-4b46-a4cd2bcae5fec944&consumer=ELibrary - FactSet Insight. (2025, August 8). S&P 500 earnings season update: August 8, 2025.
https://insight.factset.com/sp-500-earnings-season-update-august-8-2025 - State Street Global Advisors. (2025, August 18). Earnings strength defies uncertainty.
https://www.ssga.com/us/en/institutional/insights/mind-on-the-market-18-august-2025 - Yahoo Finance. (2025, August 22). Earnings live: Temu owner PDD Holdings stock gains as Nvidia earnings countdown begins.
https://finance.yahoo.com/news/live/earnings-live-zoomstock-jumps-as-markets-turn-their-focus-to-nvidia-earnings-210250806.html
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