Q4 Earnings: Tech Expected to Remain Growth Driver

S&P 500 earnings for 2025 Q4 are currently forecast to rise 6.9% year-over-year on 7.7% higher revenues (after +13.9% in Q3), but the Tech sector is the dominant driver: Tech Q4 earnings are expected to climb ~13% on +15.8% revenue growth and account for roughly half of S&P earnings growth in 2026; removing Tech cuts aggregate Q4 earnings growth to about +3.6% (and excluding the ‘Magnificent 7’ firms leaves the rest of the index up only ~3.4%). While the overall Q4 revisions trend has turned modestly negative in recent weeks, Tech continues to see persistent positive estimate revisions for Q4 and 2026 (Zacks currently projects Tech FY2026 earnings +17.4% on +13.8% revenue growth), underscoring a market backdrop concentrated in a few large cap tech names such as NVIDIA and Microsoft.

Analysis

S&P 500 aggregate earnings for 2025 Q4 are currently forecast to rise 6.9% year-over-year on 7.7% higher revenues, following a stronger +13.9% earnings gain in 2025 Q3 on +7.8% revenue growth. Excluding the Tech sector, Q4 earnings growth falls sharply to +3.6%, and excluding the Magnificent 7 leaves the rest of the index with only ~+3.4% growth, highlighting concentration in a few large names.

The Tech sector is the primary driver: Q4 Tech earnings are expected to increase ~+13% on +15.8% revenue growth (the 10th consecutive quarter of double-digit earnings growth) after +22.6% in Q3, and Zacks projects Tech calendar‑year 2026 earnings +17.4% on +13.8% revenue growth. Tech is projected to supply 35.6% of the index’s earnings over the coming four quarters while representing 44.6% of S&P market capitalization, with NVIDIA and Microsoft called out as notable beneficiaries of positive revisions.

Revisions dynamics diverge: the overall Q4 revisions trend has turned modestly negative in recent weeks after being positive earlier, whereas Tech estimate revisions remain persistently positive into 2026. The asymmetric contribution and recent broad‑market revision softening create a concentration risk where index outcomes depend heavily on continued outperformance and upward guidance from a handful of mega‑cap tech names.

Key Decisions for Investors

• Consider overweighting high‑quality, large‑cap Tech names with positive revision momentum (e.g., NVIDIA, Microsoft) while keeping absolute position sizes constrained to limit concentration risk
• Avoid relying solely on broad S&P exposure for earnings‑driven upside given ex‑Tech earnings growth is only ~3–4%; instead tilt portfolios toward identified growth contributors or sector themes supported by estimate revisions
• Monitor aggregate earnings‑estimate revisions and breadth as a near‑term risk signal and be prepared to reduce cyclical or small‑cap exposure if the overall revision trend continues to turn negative
• Use hedges or diversification (options, cash buffers, or non‑Tech allocations) to protect portfolios against a pullback in a few mega‑cap Tech names that currently dominate index earnings and market cap