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Beyond Mega-Cap Tech: Q1 Earnings Confirm a Broadening Growth Trend
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Key Takeaways
The Q1 earnings cycle has been one of strength, with growth remaining robust.
Results have been broadly strong across all sectors, with commentary also reassuring.
Expectations for Q2 remain highly bullish as well, with estimates remaining on an upward trajectory.
The Q1 earnings season reconfirmed the steadily improving earnings outlook we have consistently highlighted in our earnings commentary.
The earnings focus lately has been on the blockbuster mega-cap Tech players in the Magnificent 7 group of companies, but results have been impressive across the board in all sectors. Most companies have comfortably exceeded Zacks Consensus EPS and revenue estimates and are showing accelerating earnings and revenue growth trends.
Most importantly, the substance and tone of management guidance has largely been reassuring, notwithstanding the uncertain geopolitical backdrop. This is keeping the aggregate revisions trend positive, which we discuss in some detail later on.
The chart below shows current 2026 Q1 earnings and revenue growth expectations in the context of where growth has been in the preceding four quarters and what is expected in the coming three quarters.
Image Source: Zacks Investment Research
Regular readers of our earnings commentary are familiar with the steadily improving earnings outlook we have consistently highlighted over the past year. This improvement in the earnings outlook has been driven mostly by the Tech sector over the past year, with positive Tech sector estimate revisions offsetting negative revisions elsewhere, keeping the aggregate revisions trend in the neutral-to-positive direction.
This favorable revisions trend modestly expanded beyond its Tech sector core over the last couple of quarters and we are seeing that at play for 2026 Q2 as well, as we show nearby.
As you can see in the above chart, the current expectation is of +21.7% earnings growth in 2026 Q2 on +10.2% higher revenues. The chart below shows how these expectations have evolved in recent weeks.
Image Source: Zacks Investment Research
Estimates have moved higher for 7 of the 16 Zacks sectors since the quarter got underway. These sectors are: Tech, Energy, Basic Materials, Utilities, Industrials, Retail, and Business Services.
The positive revisions trend for the Energy and Basic Materials sectors is primarily a function of the conflict in the Persian Gulf and its effect on the supply of oil, LNG, and other commodities.
The upgrade to Retail sector earnings estimates is primarily driven by momentum in Amazon’s (AMZN - Free Report) business, which we group in the Zacks Retail sector. We suspect that elevated oil prices will prove to be a significant headwind for the sector’s profitability. The negative impact on the retail sector’s earnings outlook will mostly be through diminished consumer demand, but the freight/logistics component will also be stressed by high oil prices.
On the negative side, Q2 estimates have declined for 9 of the 16 Zacks sectors. The sectors suffering the most declines include Transportation, Autos, Consumer Discretionary, Construction, Finance, and Consumer Staples.
2026 Q1 Earnings Season Scorecard
Through Friday, May 8th, we have seen Q1 results from 446 S&P 500 members or 89.2% of the index’s total membership. Total earnings for these 446 index members are up +21.2% from the same period last year on +10.3% higher revenues, with 79.6% beating EPS estimates and 78% beating revenue estimates.
We have more than 500 companies on deck to report Q1 results this week, including 11 S&P 500 members. Notable companies reporting this week include Cisco Systems (CSCO - Free Report) , Applied Materials (AMAT - Free Report) , Mosaic (MOS - Free Report) , and others.
The comparison charts below compare the growth rates of the companies that have reported with what we have seen from this same group of companies in other recent periods.
Image Source: Zacks Investment Research
The comparison charts below put the Q1 EPS and revenue beats percentages for this group of companies relative to what we had seen from them in other recent periods.
Image Source: Zacks Investment Research
The chart below shows how net margins for the 446 index members that have reported Q1 results compare to other recent periods for this same group of companies.
Image Source: Zacks Investment Research
The Earnings Big Picture
As noted earlier, 2026 Q1 earnings are on track to be up +23.9% from the same period last year on +10.9% higher revenues, with 13 of the 16 Zacks sectors expected to enjoy positive earnings growth. Earnings growth for the quarter would be +10.1% when the Tech sector’s substantial contribution is excluded and +16.7% on an ex-Mag 7 basis.
Importantly, 2026 Q1 aggregate earnings are on track to be a new all-time quarterly record, as the chart below shows.
Image Source: Zacks Investment Research
For calendar year 2026, total S&P 500 earnings are currently expected to be up +19.7%, compared to +13.1% earnings growth last year and +16% expected next year.
All 16 Zacks sectors are currently expected to enjoy positive earnings growth in 2026, a development that we haven’t seen in a very long time. The Tech and Energy sectors are big contributors to earnings growth in 2026, with +33.2% and +56.7% earnings growth, respectively.
Excluding the Energy sector’s substantial contribution, 2026 earnings growth for the rest of the index would +17.9% (vs. +19.7% otherwise. Excluding the Tech sector, index earnings would be up +12.8% in 2026.
The chart below shows the aggregate growth picture on an annual basis.
Image Source: Zacks Investment Research
The Mag 7 group is expected to enjoy +26.2% earnings growth on +18.6% revenue growth in 2026, following the group’s +24.8% earnings growth in 2025. The Mag 7 group is on track to account for 27% of all index earnings in 2026. But the aggregate growth picture remains robust and the strongest in the post-COVID period, as seen in the chart below showing the aggregate earnings picture excluding the Mag 7 contribution.
Image Source: Zacks Investment Research
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>Record Earnings Expected in 2026 Q1
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Beyond Mega-Cap Tech: Q1 Earnings Confirm a Broadening Growth Trend
Key Takeaways
The Q1 earnings season reconfirmed the steadily improving earnings outlook we have consistently highlighted in our earnings commentary.
The earnings focus lately has been on the blockbuster mega-cap Tech players in the Magnificent 7 group of companies, but results have been impressive across the board in all sectors. Most companies have comfortably exceeded Zacks Consensus EPS and revenue estimates and are showing accelerating earnings and revenue growth trends.
Most importantly, the substance and tone of management guidance has largely been reassuring, notwithstanding the uncertain geopolitical backdrop. This is keeping the aggregate revisions trend positive, which we discuss in some detail later on.
The chart below shows current 2026 Q1 earnings and revenue growth expectations in the context of where growth has been in the preceding four quarters and what is expected in the coming three quarters.
Image Source: Zacks Investment Research
Regular readers of our earnings commentary are familiar with the steadily improving earnings outlook we have consistently highlighted over the past year. This improvement in the earnings outlook has been driven mostly by the Tech sector over the past year, with positive Tech sector estimate revisions offsetting negative revisions elsewhere, keeping the aggregate revisions trend in the neutral-to-positive direction.
This favorable revisions trend modestly expanded beyond its Tech sector core over the last couple of quarters and we are seeing that at play for 2026 Q2 as well, as we show nearby.
As you can see in the above chart, the current expectation is of +21.7% earnings growth in 2026 Q2 on +10.2% higher revenues. The chart below shows how these expectations have evolved in recent weeks.
Image Source: Zacks Investment Research
Estimates have moved higher for 7 of the 16 Zacks sectors since the quarter got underway. These sectors are: Tech, Energy, Basic Materials, Utilities, Industrials, Retail, and Business Services.
The positive revisions trend for the Energy and Basic Materials sectors is primarily a function of the conflict in the Persian Gulf and its effect on the supply of oil, LNG, and other commodities.
The upgrade to Retail sector earnings estimates is primarily driven by momentum in Amazon’s (AMZN - Free Report) business, which we group in the Zacks Retail sector. We suspect that elevated oil prices will prove to be a significant headwind for the sector’s profitability. The negative impact on the retail sector’s earnings outlook will mostly be through diminished consumer demand, but the freight/logistics component will also be stressed by high oil prices.
On the negative side, Q2 estimates have declined for 9 of the 16 Zacks sectors. The sectors suffering the most declines include Transportation, Autos, Consumer Discretionary, Construction, Finance, and Consumer Staples.
2026 Q1 Earnings Season Scorecard
Through Friday, May 8th, we have seen Q1 results from 446 S&P 500 members or 89.2% of the index’s total membership. Total earnings for these 446 index members are up +21.2% from the same period last year on +10.3% higher revenues, with 79.6% beating EPS estimates and 78% beating revenue estimates.
We have more than 500 companies on deck to report Q1 results this week, including 11 S&P 500 members. Notable companies reporting this week include Cisco Systems (CSCO - Free Report) , Applied Materials (AMAT - Free Report) , Mosaic (MOS - Free Report) , and others.
The comparison charts below compare the growth rates of the companies that have reported with what we have seen from this same group of companies in other recent periods.
Image Source: Zacks Investment Research
The comparison charts below put the Q1 EPS and revenue beats percentages for this group of companies relative to what we had seen from them in other recent periods.
Image Source: Zacks Investment Research
The chart below shows how net margins for the 446 index members that have reported Q1 results compare to other recent periods for this same group of companies.
Image Source: Zacks Investment Research
The Earnings Big Picture
As noted earlier, 2026 Q1 earnings are on track to be up +23.9% from the same period last year on +10.9% higher revenues, with 13 of the 16 Zacks sectors expected to enjoy positive earnings growth. Earnings growth for the quarter would be +10.1% when the Tech sector’s substantial contribution is excluded and +16.7% on an ex-Mag 7 basis.
Importantly, 2026 Q1 aggregate earnings are on track to be a new all-time quarterly record, as the chart below shows.
Image Source: Zacks Investment Research
For calendar year 2026, total S&P 500 earnings are currently expected to be up +19.7%, compared to +13.1% earnings growth last year and +16% expected next year.
All 16 Zacks sectors are currently expected to enjoy positive earnings growth in 2026, a development that we haven’t seen in a very long time. The Tech and Energy sectors are big contributors to earnings growth in 2026, with +33.2% and +56.7% earnings growth, respectively.
Excluding the Energy sector’s substantial contribution, 2026 earnings growth for the rest of the index would +17.9% (vs. +19.7% otherwise. Excluding the Tech sector, index earnings would be up +12.8% in 2026.
The chart below shows the aggregate growth picture on an annual basis.
Image Source: Zacks Investment Research
The Mag 7 group is expected to enjoy +26.2% earnings growth on +18.6% revenue growth in 2026, following the group’s +24.8% earnings growth in 2025. The Mag 7 group is on track to account for 27% of all index earnings in 2026. But the aggregate growth picture remains robust and the strongest in the post-COVID period, as seen in the chart below showing the aggregate earnings picture excluding the Mag 7 contribution.
Image Source: Zacks Investment Research
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>Record Earnings Expected in 2026 Q1