Zacks Earnings Trends Highlights: Costco, Oracle and Adobe

For Immediate ReleaseChicago, IL – March 20, 2025 – Zacks Director of Research Sheraz Mian says, "Q1 earnings for the ‘Magnificent 7’ group of companies are expected to be up +13.9% from the same period last year on +11.9% higher revenues."A Closer Look at Earnings Expectations for Q1 & FY2025Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>Here are the key points:Total 2025 Q1 earnings for the S&P 500 index are expected to be up +6.1% from the same period last year on +3.7% higher revenues, which would follow the +13.8% earnings growth on +5.4% revenue growth in the preceding period.Q1 earnings estimates have steadily come down since the quarter got underway, with the current +6.1% expected growth pace down from +10.4% at the start of January 2025.Not only is the magnitude of negative revisions to Q1 estimates greater than what we had seen in the comparable periods of other recent periods, but it is also more broad-based, with 13 of the 16 Zacks sectors suffering estimate cuts in this time period.Q1 earnings for the ‘Magnificent 7’ group of companies are expected to be up +13.9% from the same period last year on +11.9% higher revenues. Excluding the ‘Mag 7’ contribution, Q1 earnings for the rest of the index would be up +3.9% (vs. +6.1%).Soft Start to the Q1 Reporting CycleThe March-quarter earnings season will really get underway once the big banks start reporting results on Friday, April 11th. But we have seen quarterly results from a few companies in recent days for their respective fiscal quarters ending in February. In fact, 5 S&P 500 members with such February-ending fiscal quarters have reported results in recent days, including bellwethers like Costco COST, Oracle ORCL and Adobe ADBE. We count all such February-quarter results as part of our March-quarter earnings tally.It is too early to draw any conclusions from these early results, but market participants have not been impressed with these results, particularly on the guidance front. The guidance issues for these bellwethers are potentially problematic given the all-around macro worries that the market is currently sizing up.Oracle missed on the top- and bottom-lines, but the internals of the company’s release showed plenty of growth momentum, with impressive gains on the backlog front. What was less impressive was the outlook for margins and a further ramp-up in capex spending.Adobe, on the other hand, beat earnings and revenue estimates, but the reiterated guidance can be seen as a decelerating growth trend, and the AI ramp-up is seen as too slow. While earnings estimates for Adobe for the current period (fiscal quarter ending in May) have remained stable after the quarterly release, the same for Oracle have come down.Tech Sector Remains a Growth DriverThe Tech sector has been a significant growth driver in recent quarters, and we saw the same trend at play in 2024 Q4. For Q1, Tech sector earnings are expected to be up +12.7% from the same period last year on +10.0% higher revenues, the 7th quarter in a row of double-digit earnings growth.This would follow the sector’s +26.2% earnings growth on +11.3% higher revenues in 2024 Q4.The Tech sector has also been among those few sectors that have steadily enjoyed an improving earnings outlook, with estimates steadily increasing over the past year. However, the more recent data on this count shows a shift in the revisions trend, with estimates for Q1 modestly under pressure since January, though they remain positive for the full year 2025.The Earnings Big PictureTotal S&P 500 earnings for the current period (2025 Q1) are currently expected to be up +6.1% from the same period last year on +3.7% higher revenues.Estimates for the period have been coming down since the quarter got underway,.The revisions trend is broad-based, with estimates for 15 of the 16 sectors down since the start of January (Medical is the only sector whose estimates have increased). Sectors suffering the most significant cuts to estimates include Conglomerates, Aerospace, Construction, Basic Materials, Autos, and others. Unlike other recent periods, estimates for the Tech sector have also been under pressure.As you can see, the expectation is for double-digit earnings growth in each of the next two years, with the number of sectors enjoying strong growth notably expanding from the narrow base we have been seeing lately.In fact, 2025 is expected to have nearly all Zacks sectors enjoy earnings growth, with 6 of the 16 Zacks sectors expected to produce double-digit earnings growth. Unlike the last two years, when the Mag 7 group drove all or most of the aggregate earnings growth, we will have strong earnings growth in 2025, even without contributions from this mega-cap group.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comZacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Oracle Corporation (ORCL): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Adobe Inc. (ADBE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks