Earnings Prospects Brighten Even as Iran Conflict Continues

Highlights from This Week’s Earnings Trends

Excerpted from the latest Earnings Trends report. For comprehensive data and projections, click here to access the full report >>>

Key Takeaways

• S&P 500 earnings for Q1 2026 are forecasted to rise by 12.8% year-over-year, with revenues expected to climb by 8.8%. This follows a 14% earnings increase and 9.1% revenue growth in Q4 2025.
• Projections for both the first quarter and the entire year of 2026 remain optimistic, with positive estimate revisions persisting even after the onset of the Middle East conflict.
• Since March, upward revisions have been seen in the Energy sector, along with seven other sectors tracked by Zacks, such as Technology, Finance, Construction, Basic Materials, and Transportation.
• The Technology sector continues to be a major driver of growth, anticipated to deliver 27.1% earnings growth in Q1 2026. Without Tech’s contribution, the S&P 500’s earnings growth for the quarter would be 5.6% instead of 12.8%.

Tech Sector Fuels Positive Revisions Amid Uncertainty

Geopolitical tensions and ongoing concerns about the future of software companies, as well as the increasing expenditures by the so-called “Mag 7” firms, have weighed on investor sentiment. This is reflected in the year-to-date performance of Mag 7 stocks, the Zacks Tech and Finance sectors, and the S&P 500 index.

Image Source: Zacks Investment Research

Although there is significant overlap between the Mag 7 and the Tech sector, Zacks classifies Amazon (AMZN) under Retail and Tesla (TSLA) under Autos, rather than Technology.

Despite the cautious mood surrounding these groups, both the Mag 7 and Tech sector remain the most profitable segments within the S&P 500, as evidenced by ongoing upward revisions in earnings estimates.

Since January, the trend of estimate upgrades has been strong and has not faltered even with the escalation of conflict in the Middle East. The Energy sector, which previously faced downward pressure, has seen its estimates rebound. In fact, half of the 16 Zacks sectors—including Technology, Finance, Construction, and Basic Materials—have experienced estimate increases since March.

For Q1 2026, the Zacks Tech sector is projected to achieve 27.1% earnings growth and 22.5% revenue growth, as illustrated below.

Image Source: Zacks Investment Research

Technology has been the backbone of overall earnings expansion since Q3 2023 and is expected to maintain this role in Q1 2026. Excluding Tech, S&P 500 earnings growth for the quarter would be just 5.6%.

Importantly, Tech sector estimates continue to trend higher, despite the aforementioned headwinds, as shown in the following chart.

Image Source: Zacks Investment Research

Overview of S&P 500 Earnings

The chart below compares Q1 2026 expectations to results from the previous four quarters and projections for the next three quarters.

Image Source: Zacks Investment Research

As previously mentioned, the current quarter’s (Q1 2026) revision trend has remained solid, as depicted below.

Image Source: Zacks Investment Research

The following chart presents the annual earnings outlook for the S&P 500 index.

Image Source: Zacks Investment Research

One notable trend is how full-year 2026 estimates have shifted since the Iran conflict began. While the Energy sector’s estimates have predictably rebounded since March, eight other sectors have also seen upgrades. The Tech sector’s positive momentum continues, and both Basic Materials and Consumer Staples have moved from negative to positive revisions since March.

Energy represented just 4.5% of S&P 500 earnings in 2025, so its influence on overall growth is limited. However, persistently high oil prices could eventually impact the profitability of other sectors. If supply challenges continue for several more months, aggregate earnings estimates may face downward pressure.

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Originally published by Zacks Investment Research

Zacks Investment Research