3Q25 Earnings Season: Strong Results, Mixed Market Reactions

The third-quarter earnings season is rolling along with solid momentum. So far, 78% of S&P 500 companies have reported, and the results are impressive: 

• 82% beat earnings expectations
• 66% topped revenue estimates
• The blended year-over-year earnings growth rate now stands at 10.7%, marking the fourth straight quarter of double-digit growth and the ninth consecutive quarter of overall earnings expansion—a sign of this bull market’s staying power. 

That said, the market hasn’t been especially generous in rewarding positive surprises, while misses have been met with sharp selloffs. This could be a sign we’re entering a late-cycle phase, with valuations and expectations already running high. 

Financials, tech, and consumer discretionary have led the charge, while industrials and communication services have lagged. This week, another 136 companies are set to report, with 56 already in as of yesterday (11/04/25). 

Alphabet, Amazon, Microsoft, and Apple have been key contributors. Meta, however, disappointed with earnings per share (EPS) of $1.05 vs. expectations of $6.72—making it the biggest drag on aggregate earnings growth. All eyes now turn to Nvidia’s report (on 11/19/25), which could significantly shape the final picture. 

Overall, valuations remain elevated, with forward price-to-earnings (P/E) at 23.1x, above the 5-, 10-, and 15-year averages. Looking ahead, consensus expects fourth quarter earnings growth of 7.6%, suggesting slower but continued expansion. 

The bottom line: In this environment, we continue to favor high-quality companies with 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. 

As of 11/04/25. Source: Bloomberg, FactSet. 

Sebastian Teper contributed to this article.