These ETFs Could Be Earnings Growth Winners

Analysts are significantly boosting S&P 500 EPS forecasts for Q3 and CY 2025, particularly in Information Technology and Communication Services, signaling a potentially strong upcoming earnings season. This trend positions ETFs like Invesco QQQ and QQQM favorably, given their 79% allocation to these leading sectors and significant holdings in AI-driven stocks such as Nvidia and Broadcom, while maintaining low exposure to sectors experiencing EPS estimate declines like Healthcare.

Analysis

Analyst sentiment is turning notably positive ahead of the third-quarter earnings season, with aggregate EPS forecasts for S&P 500 firms being revised upward in July and August for the first time since Q2 2024. According to FactSet data, this trend is led by significant positive revisions in the Information Technology (+4.4%) and Communication Services (+2.6%) sectors for Q3 2025, contrasted by a sharp decline in the Health Care sector (-7.2%). This divergence positions Nasdaq-100 tracking ETFs, specifically QQQ and QQQM, favorably, as their portfolios are heavily concentrated with approximately 79% in the outperforming Technology and Communication Services sectors, while carrying minimal exposure (4.50%) to the underperforming Healthcare sector. The thesis is further reinforced by strong recent earnings from key holdings Nvidia (NVDA) and Broadcom (AVGO), which comprise nearly 15% of the funds and signal continued strength in the AI-driven earnings narrative. Looking further ahead to calendar year 2025, positive EPS revisions in Communication Services (+4.0%) and Consumer Discretionary (+3.0%), which together account for over 29% of the ETFs' rosters, suggest a sustained positive outlook.

Key Decisions for Investors

• Investors may consider overweighting exposure to Nasdaq-100 tracking ETFs like QQQ and QQQM to capitalize on the strong positive earnings per share revisions in the heavily weighted Technology and Communication Services sectors.
• Given the significant negative EPS revisions of -7.2% for Q3 in the Healthcare sector, it would be prudent to review portfolio allocations and potentially reduce exposure to this sector ahead of earnings announcements.
• Monitor upcoming results from key semiconductor holdings like Nvidia and Broadcom, as their performance will serve as a crucial validation of the AI-driven growth thesis underpinning the bullish outlook for the technology sector.
• The data suggests a tactical tilt favoring growth-oriented sectors with positive estimate revisions, such as Technology and Communication Services, over defensive sectors like Healthcare that face downward earnings pressure.