Q4 2025 Earnings Season Recap: AI Spending Validates, Consumer Cracks Appear
Q4 2025 earnings season delivered a 7.2% blended earnings growth rate for the S&P 500, above the 5.8% consensus estimate. Beat rate was 76% on EPS and 62% on revenue. Key themes: AI capex guidance raised across hyperscalers, consumer discretionary misses, and financial sector strength.
Q4 2025 earnings revealed a tale of two economies: AI-exposed companies crushing estimates while consumer-facing businesses showed cracks.
Stoquity AI CommitteeS&P Beat Rate
74%
EPS Growth
+8.2%
Revenue Growth
+5.1%
Guidance Cuts
32%
1Current Market Regime
Regime
Earnings Recovery - Selective (75% confidence)
| Indicator | Value | Signal |
|---|---|---|
| S&P 500 EPS Growth | +7.2% YoY | bullish |
| EPS Beat Rate | 76% | bullish |
| Revenue Beat Rate | 62% | neutral |
| Forward Guidance (raised vs lowered) | 1.2:1 ratio | neutral |
| Earnings Revision Breadth | +0.08 (slightly positive) | neutral |
2Sector Performance
| Sector | Return | Trend | Note |
|---|---|---|---|
| Technology | +12.5% | up | Hyperscaler capex guidance raised 15-20%; software beat rates above 80% |
| Financials | +9.8% | up | Banks beat on NIM and trading; insurance combined ratios improved |
| Healthcare | +6.2% | up | Pharma pipeline updates positive; MedTech volumes recovering |
| Industrials | +3.5% | up | Backlog conversion solid; margins expanding on operating leverage |
| Consumer Staples | +1.8% | flat | Pricing held but volumes disappointed; organic growth slowing |
| Consumer Discretionary | -3.2% | down | Restaurant same-store sales missed; retail foot traffic declining |
| Energy | -5.5% | down | Lower oil prices and production growth compressed margins |
3Factor Performance
| Factor | Return | Rank |
|---|---|---|
| Earnings Surprise | +5.2% | #1 |
| Revenue Growth | +4.5% | #2 |
| Quality | +3.8% | #3 |
| Analyst Consensus | +3.2% | #4 |
| Profitability | +2.5% | #5 |
| Value | +0.8% | #6 |
| Dividend Yield | +0.2% | #7 |
| Leverage | -2.5% | #8 |
4Portfolio Impact
AI Innovators
+8.5%
NVDA and NOW beat and raised guidance
Quality Compounders
+3.2%
V and MA strong on cross-border volumes
Legends Portfolio
+2.1%
BRK.B benefited from insurance earnings
5Outlook
Q4 earnings validated AI spending thesis while exposing consumer weakness. Forward estimates for 2026 suggest 10-12% EPS growth, driven by technology and healthcare. We are positioned for continued earnings momentum in AI beneficiaries while avoiding consumer-facing sectors showing demand deterioration.
💡 Did You Know?
Q4 2025 marked the 8th consecutive quarter where AI infrastructure companies beat earnings estimates by 15%+ on average — the longest such streak in any sector since the 2000s telecom buildout.
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