08 AUGUST 2025
The chart below shows consensus earnings expectations for companies in the S&P 500, the main driver of global stock markets.
Forecast earnings growth just shy of 10% in 2025 is expected to be followed by nearly 14% growth in both 2026 and 2027. Such an achievement would be impressive, given a long-term growth rate typically closer to 7%, and it explains an important part of the market’s current enthusiasm.
Where will that growth come from? The Magnificent Seven accounted for more than half of US earnings growth last year, but that falls to under 40% this year and less than 30% next. It is improvement in non-tech companies’ earnings, such as financials, that are forecast to drive markets higher from here. A substantial portion of this earnings growth is expected to be down to margin expansion. Given the already hefty margins achieved by the Mag 7 it is not surprising that their overall contribution is expected to diminish.
The laggard? Energy, where earnings are expected to fall nearly 25% due to lower oil prices and a continuation of the weak environment for commodities.
The content of this communication is for information purposes only. Bentley Reid believes that, at the time of publication, the views expressed and opinions given are correct but cannot guarantee replication of depicted performance. Viewers intending to take action based upon the content of this communication should first consult with the professional who advises them on their financial affairs. Capital invested will be at risk, and you may get back less than you invest. The past is not a reliable indicator of future performance. Neither the publisher nor any of its subsidiaries or connected parties accepts responsibility for any direct or indirect loss suffered by a recipient as a result of any action or inaction, in reliance upon the content of this communication.
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