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Earnings Outlook Brightens as Estimates Keep Rising
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Key Takeaways
The earnings revisions trend remains positive, similar to what we experienced in the last two quarters.
Energy has seen the largest set of upward earnings revisions, with Tech and Basic Materials also benefiting.
Q2 earnings are currently expected to be up 22.2% on 10.9% higher revenues YoY.
Oracle (ORCL - Free Report) shares were down following very strong quarterly results that showed impressive cloud momentum and steady customer diversification beyond OpenAI in its AI-centric backlog.
The negative market reaction reflected its ever-rising capital intensity, with capex for the year raised once again, pushing Oracle’s free cash flows further into negative territory. Oracle plans to raise about $40 billion to fund its capex this year through a combination of debt and equity instruments, with dilution risk becoming a bigger risk for the stock. Management expects peak capex outlays through the following fiscal year, with the pace declining in the outer years as the installed base matures.
Unlike the dramatic AI-driven acceleration in Oracle’s quarterly numbers, Adobe's (ADBE - Free Report) report showed the company monetizing AI through higher engagement, greater user retention, and premium features, in contrast to many free competing offerings that lack enterprise controls, licensing protections, and workflow integration.
Adobe shares have lost more than two-thirds of their value over the last two years, as many in the market are skeptical of the company’s ability to maintain profitability in the coming AI world. Uncertainty around leadership transition adds to these headwinds.
The Oracle report was for its fiscal quarter ending in May, which we count as part of the June-quarter tally. We now have five S&P 500 members, including Oracle and Adobe, that have reported such fiscal May-quarter results. The others are Costco, AutoZone, and Lennar. By the time the big banks report in mid-July, we will have seen Q2 results from almost two dozen index members with fiscal quarters ending in May, including Jabil, CarMax, and Accenture this week.
Looking at 2026 Q2 as a whole, total S&P 500 earnings are expected to increase by +22.2% from the same period last year on +10.9% higher revenues.
The chart below shows Q2 earnings and revenue growth expectations in the context of growth over the preceding four quarters and what is expected over the next three quarters.
Image Source: Zacks Investment Research
The revisions trend remains positive, similar to what we experienced in the last two quarters as well. Aggregate earnings estimates for the S&P 500 index have steadily moved higher since the quarter got underway in April, as the chart below shows.
Image Source: Zacks Investment Research
Q2 earnings estimates have increased for 5 of the 16 Zacks sectors since the quarter began, offsetting negative revisions in the remaining 11 sectors.
The Energy sector has enjoyed the most obvious earnings outlook upgrade, with aggregate earnings estimates for the sector up more than +80% since the start of April. Earnings for the Zacks Energy sector are currently expected to increase by +116.4% from the year-earlier period. Other sectors enjoying favorable estimate revisions include Tech, Basic Materials, Utilities, and Business Services.
Excluding the positive revisions to either the Energy or Tech sectors, the aggregate Q2 revisions trend would have been negative.
Of the 11 sectors whose estimates have been under pressure since the start of April, the ones experiencing the most negative revisions are Transportation, Medical, Consumer Discretionary, Autos, and Construction.
The chart below shows the overall earnings picture on a calendar-year basis.
Image Source: Zacks Investment Research
In terms of index ‘EPS’, the above growth rates imply $319.96 per index ‘share’ in 2026, up $264.38 in 2025.
The revisions trend for full-year 2026 is even more positive than we noted in the case of 2026 Q2, with estimates for 11 of the 16 Zacks sectors going up since the start of March 2026. The Energy, Tech, and Basic Materials sectors are the most notable beneficiaries of the improving earnings outlook, but estimates have increased across the board.
The sectors that have suffered negative estimate revisions since the start of March are Transportation, Autos, Consumer Discretionary, Consumer Staples, and Medical.
The chart below shows how full-year 2026 aggregate earnings estimates have evolved over the past year.
Image Source: Zacks Investment Research
2026 Q2 Earnings Season Scorecard
We are in that part of the reporting cycle when the preceding earnings season (2026 Q1, in this case) has not yet fully ended, even as the coming earnings season (2026 Q2) has already begun, as we noted earlier.
Through Friday, June 12th, we have seen fiscal May-quarter results from 5 S&P 500 members – Oracle, Adobe, Costco, AutoZone, and Lennar. Total earnings for these 5 companies are up +18.6% from the same period last year on +11.5% higher revenues, with 80% beating EPS estimates and 60% beating revenue estimates.
The comparison charts below put the growth rates for the companies that have reported with what we had 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
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>2026 Q2 Earnings Season Preview: What to Expect
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Earnings Outlook Brightens as Estimates Keep Rising
Key Takeaways
Oracle (ORCL - Free Report) shares were down following very strong quarterly results that showed impressive cloud momentum and steady customer diversification beyond OpenAI in its AI-centric backlog.
The negative market reaction reflected its ever-rising capital intensity, with capex for the year raised once again, pushing Oracle’s free cash flows further into negative territory. Oracle plans to raise about $40 billion to fund its capex this year through a combination of debt and equity instruments, with dilution risk becoming a bigger risk for the stock. Management expects peak capex outlays through the following fiscal year, with the pace declining in the outer years as the installed base matures.
Unlike the dramatic AI-driven acceleration in Oracle’s quarterly numbers, Adobe's (ADBE - Free Report) report showed the company monetizing AI through higher engagement, greater user retention, and premium features, in contrast to many free competing offerings that lack enterprise controls, licensing protections, and workflow integration.
Adobe shares have lost more than two-thirds of their value over the last two years, as many in the market are skeptical of the company’s ability to maintain profitability in the coming AI world. Uncertainty around leadership transition adds to these headwinds.
The Oracle report was for its fiscal quarter ending in May, which we count as part of the June-quarter tally. We now have five S&P 500 members, including Oracle and Adobe, that have reported such fiscal May-quarter results. The others are Costco, AutoZone, and Lennar. By the time the big banks report in mid-July, we will have seen Q2 results from almost two dozen index members with fiscal quarters ending in May, including Jabil, CarMax, and Accenture this week.
Looking at 2026 Q2 as a whole, total S&P 500 earnings are expected to increase by +22.2% from the same period last year on +10.9% higher revenues.
The chart below shows Q2 earnings and revenue growth expectations in the context of growth over the preceding four quarters and what is expected over the next three quarters.
Image Source: Zacks Investment Research
The revisions trend remains positive, similar to what we experienced in the last two quarters as well. Aggregate earnings estimates for the S&P 500 index have steadily moved higher since the quarter got underway in April, as the chart below shows.
Image Source: Zacks Investment Research
Q2 earnings estimates have increased for 5 of the 16 Zacks sectors since the quarter began, offsetting negative revisions in the remaining 11 sectors.
The Energy sector has enjoyed the most obvious earnings outlook upgrade, with aggregate earnings estimates for the sector up more than +80% since the start of April. Earnings for the Zacks Energy sector are currently expected to increase by +116.4% from the year-earlier period. Other sectors enjoying favorable estimate revisions include Tech, Basic Materials, Utilities, and Business Services.
Excluding the positive revisions to either the Energy or Tech sectors, the aggregate Q2 revisions trend would have been negative.
Of the 11 sectors whose estimates have been under pressure since the start of April, the ones experiencing the most negative revisions are Transportation, Medical, Consumer Discretionary, Autos, and Construction.
The chart below shows the overall earnings picture on a calendar-year basis.
Image Source: Zacks Investment Research
In terms of index ‘EPS’, the above growth rates imply $319.96 per index ‘share’ in 2026, up $264.38 in 2025.
The revisions trend for full-year 2026 is even more positive than we noted in the case of 2026 Q2, with estimates for 11 of the 16 Zacks sectors going up since the start of March 2026. The Energy, Tech, and Basic Materials sectors are the most notable beneficiaries of the improving earnings outlook, but estimates have increased across the board.
The sectors that have suffered negative estimate revisions since the start of March are Transportation, Autos, Consumer Discretionary, Consumer Staples, and Medical.
The chart below shows how full-year 2026 aggregate earnings estimates have evolved over the past year.
Image Source: Zacks Investment Research
2026 Q2 Earnings Season Scorecard
We are in that part of the reporting cycle when the preceding earnings season (2026 Q1, in this case) has not yet fully ended, even as the coming earnings season (2026 Q2) has already begun, as we noted earlier.
Through Friday, June 12th, we have seen fiscal May-quarter results from 5 S&P 500 members – Oracle, Adobe, Costco, AutoZone, and Lennar. Total earnings for these 5 companies are up +18.6% from the same period last year on +11.5% higher revenues, with 80% beating EPS estimates and 60% beating revenue estimates.
The comparison charts below put the growth rates for the companies that have reported with what we had 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
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>2026 Q2 Earnings Season Preview: What to Expect