Q1 2026 US earnings season preview: record expectations meet geopolitical risk

Expectations have never been higher

According to FactSet, the consensus estimate for S&P 500 first-quarter 2026 earnings growth, as of 31 March, stands at 13.2% year-on-year (YoY). Should this materialise, it will extend an unbroken run of double-digit growth stretching back to Q4 2024.

The estimate was also the highest going into any earnings season in the FactSet data available since Q2 2022. For context, the equivalent estimate entering Q4 2025 was just 8.3%; actual growth for that quarter came in at 13.9%, an outperformance of 5.6 percentage points. The Q1 2026 starting estimate is set approximately 60% higher than the equivalent figure entering Q4 2025. If the long-run beat pattern holds — over the past four quarters, 79% of S&P 500 companies exceeded estimates with an average upside surprise of 7.2% — the index could approach actual growth of approximately 19%, which would represent the strongest quarterly earnings performance since Q4 2021.

Based on LSEG data, of the 22 companies that had reported as of 13 April, 77% beat the mean EPS estimate with an aggregate surprise of 14.3%, representing a constructive early signal. Yet the elevated starting point means any shortfall in guidance will be punished severely.

S&P 500 earnings growth estimates

Valuations offer a more supportive floor

One offsetting consideration is that the market enters this earnings season at a more reasonable valuation than at the start of the year. According to LSEG data, the S&P 500 is currently trading at 19.4x forward 12-month earnings — above the 10-year average of 19.0x, but below the 5-year average of 20.0x and at its lowest level since the Liberation Day selloff in April 2025.

The recent valuation compression creates a more constructive entry point: positive earnings surprises and optimistic forward guidance now carry greater potential to move multiples than they did when the market was trading at 22x a quarter ago. That said, the valuation support is not unconditional. Should companies begin revising down their full-year guidance to reflect the uncertainties from higher energy costs, the valuation cushion would erode quickly.

S&P 500 valuation and price

Risk shifts from tariffs to geopolitics

Twelve months ago, 452 S&P 500 companies cited 'tariff' or 'tariffs' on Q1 2025 earnings calls, making trade policy the defining theme of that season. For Q1 2026, geopolitical risk has taken its place. The US-Iran conflict that commenced on 28 February has produced an energy price shock. Elevated commodity prices translate directly into fuel, logistics, manufacturing inputs, and packaging costs. This compresses margins for businesses with material energy or freight exposure. Beyond direct cost pressure, the broader erosion of household purchasing power risks softening consumer demand even for businesses with limited energy exposure.

As the bulk of Q1 business activity predates the conflict's outbreak, the headline numbers will offer limited insight into the true cost impact; the critical test this season will be companies' forward guidance. Investors should focus on three metrics: revenue beats, typically seen as more reliable signals of underlying demand; operating margin trends, which reveal how much of the energy cost increase has been absorbed; and full-year guidance revisions, which will determine whether the current consensus for 17.4% full-year earnings growth remains defensible.

Not all sectors are equal

Eight of the eleven sectors are projected to report YoY earnings growth in Q1 2026, led by Information Technology (+45.0%), Materials (+24.2%), and Financials (+15.1%). Health Care (-9.8%) is expected to lead the decline, with Merck's one-time acquisition charge weighing down on the sector's growth rate. Excluding Merck, the sector would be on track to report earnings growth of approximately 2.8%.

Energy stands out as the wild card amid the Middle East conflict. Its earnings growth estimate swung from 0.3% at the start of the year to 12.9% on 3 April as higher commodity prices flowed through to upstream earnings, before falling back to -0.1% on 10 April following downward revisions driven primarily by ExxonMobil's guidance on production disruptions and hedging losses.

The volatility in that single sector illustrates precisely why forward guidance — rather than the headline growth rate — will define how this earnings season is ultimately judged.

Earnings calendar

The bulk of the season unfolds over the next six weeks. The financial sector opens proceedings this week, with Goldman Sachs, JPMorgan Chase among those first to report. The technology and consumer heavyweights — Microsoft, Alphabet, Meta, Apple, and Amazon — dominate the final week of April. Nvidia, whose fiscal quarter follows a different reporting cycle, reports in late May.

Earnings calendar for major US companies

The figures stated in this article are as of 13 April unless otherwise stated. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.