3Q results season starts with a bang

October 22, 2025
Time to read: Minutes

Barbara Reinhard, CFA

CIO, Multi-Asset Strategies and Solutions

The 3Q 2025 earnings season is off to a solid start. With 12% of S&P 500 companies having reported, 86% have exceeded earnings expectations, and 84% have surpassed revenue forecasts. The blended year-over-year earnings growth rate stands at 8.5%, which, if sustained, would mark the ninth consecutive quarter of growth.

As in previous quarters, the “Magnificent Seven” continue to drive performance, with expected earnings growth of 14.9%, compared to 6.7% for the remaining 493 companies. Notably, the “Magnificent Seven” delivered 26.6% earnings growth in 2Q, far outpacing the 13.9% estimate.

Valuations remain elevated, with the forward P/E ratio at 22.4x above both the 5-year average of 19.9x and the 10-year average of 18.6x. In this environment, we continue to favor high-quality companies that demonstrate strong pricing power and operational flexibility.

Given the resilience of U.S. large caps, we maintain a constructive view on domestic equities relative to international markets.

Maverick Lin contributed to this article. All data from FactSet.

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