Earnings season roundup – how have US and European stocks fared?

As the latest earnings season draws to a close, both US and European markets have delivered a mixed but generally encouraging set of results. While concerns around tariffs and global trade persist, corporate performance has shown resilience, particularly in key sectors like technology and financials. 

Here's a breakdown of how stocks have fared each side of the Atlantic.

US - stronger than expected

In the US, earnings results have come in much better than feared. Among S&P 500 companies, approximately 69% beat sales expectations, while an impressive 81% exceeded earnings per share (EPS) forecasts. These figures are not only above the 10-year average but also represent a recent record, highlighting corporate strength in the US, despite cautious forecasts.

The magnitude of the earnings surprise is also worth highlighting. On average, companies delivered EPS results that was 9% higher than analysts anticipated. This upside is largely down to overly conservative earnings revisions earlier in the year as many overestimated the impact of tariffs.

From a sector point of view, the technology and AI story remains robust. Investment in webscale infrastructure has surged, with capital expenditure up 70% year-on-year. The AI hyperscalers continue to report strong AI-driven growth, reinforcing the sector’s role as a key driver of market performance.

Consumer spending also appears to be in a healthy place. Both Mastercard and Visa delivered solid earnings, supported by data indicating that consumer activity remains strong. This has helped bolster confidence in the broader economic outlook.

Importantly, positive earnings revisions now outnumber negative ones, with analysts raising estimates for the remainder of 2025. However, there are growing concerns around market valuation. Some fear that investors have become complacent, adopting a “rising tide lifts all boats” approach that may not hold up under closer scrutiny. While the US has demonstrated pricing power - particularly in the context of tariff threats and subsequent trade deals - not all companies are likely to emerge unscathed.

Europe - quiet strength beneath the surface

Europe is now about 80% through its earnings season. While top-line sales numbers have been slightly underwhelming, earnings growth has been surprisingly strong. Companies across the region have delivered earnings growth of 10% - with a 14% upside surprise compared to expectations.

This performance has been driven primarily by technology, materials, and financial stocks, which have shown resilience despite broader economic challenges. Although media coverage has focused on guidance downgrades, many companies have actually upgraded their forecasts for the rest of the year. This mirrors the trend seen in the US, where positive revisions have outpaced negative ones.

The recent trade deal announcement has helped reduce market uncertainty and could pave the way for further upward revisions. While the full-year earnings growth forecast for 2025 has been revised down to around 3% - from a previous estimate of 7% - this decline highlights the impact of tariff-related headwinds of around 4%.

Valuations across Europe currently appear fair, but there is room for upside surprises. With expectations set relatively low, European stocks might benefit from a more favourable outlook if trade conditions continue to improve.

Source: Bloomberg and Factset 

Looking ahead

As we move into the second half of 2025, investors face a complex and evolving landscape. Tariff uncertainty remains a key risk as the US continues to build relationships with global trade partners. While some deals have been agreed with major trading nations, the finer details of these agreements could take years to fully play out – the devil will be in the detail.