Energy and other sectors drive earnings estimates higher

Total S&P 500 earnings in the first quarter of 2026 are currently expected to increase by +12.0% from the same period last year on +8.6% higher revenues. This would follow the +14% increase in earnings on +9.1% higher revenues in the preceding period (2025 Q4).

• Estimates for 2026 Q1 and full-year 2026 remain positive, with the favorable revisions trend firmly in place even after the start of the Middle East conflict.
• Estimates for the Energy sector have moved higher since the start of March, but estimates have also increased for 8 other Zacks sectors, including Tech, Finance, Construction, Basic Materials, and Utilities. 
• The Tech sector has been a critical growth pillar since 2023 Q3 and is expected to play that role in 2026 Q1 as well, with expected earnings growth of +24.6%. Excluding the Tech sector’s substantial contribution, Q1 earnings growth for the rest of the S&P 500 index would be +5.5% (vs. +12.0% otherwise).

A favorable revisions trend, driven by the tech sector

Elevated headline risks resulting from geopolitical turmoil have joined pre-existing worries about the future of software businesses and the seemingly ever-rising spending by the Mag 7 companies. Sentiment, as a result, has been downbeat on Mag 7 and software stocks, as the year-to-date performance chart of Mag 7 stocks, the Zacks Tech sector, the Zacks Finance sector, and the S&P 500 index shows.

There is a fair amount of overlap between the Mag 7 stocks and the Tech sector, but the Zacks industry classification system places two of the Mag 7 stocks – Amazon (AMZN ) and Tesla (TSLA) – outside the Tech sector, with Amazon in the Zacks Retail sector and Tesla in the Zacks Auto sector.

The soft sentiment on the Mag 7 stocks and Tech sectors notwithstanding, these two spaces represent the most robust profitability centers in the entire S&P 500 index, with a steadily improving earnings outlook reflected in positive estimate revisions.

The revisions trend has been broadly positive since the start of the period in January, and the favorable trend has remained unchanged since the start of hostilities in the Middle East. Estimates for the Energy sector that had earlier been under pressure have reversed course and are now going up. But estimates are actually up for half of the 16 Zacks sectors since the start of March, aside from Energy, including the Tech, Finance, Construction, and Basic Materials sectors.

For 2026 Q1, the Zacks Tech sector is expected to produce +24.8% earnings growth on +21.8% higher revenues, as the chart below shows.

The Tech sector has been a critical pillar of aggregate earnings growth since 2023 Q3 and is expected to play that role in 2026 Q1 as well.

For Q1 as a whole, total S&P 500 earnings are expected to be up +12.0% from the same period last year. But the aggregate growth pace drops to +5.5% once the Tech sector’s contribution is excluded.

Even more importantly, estimates for the Tech sector are steadily going up, notwithstanding the aforementioned sentiment issues, as the chart below shows.

In fact, the positive revisions trend for the Tech sector has been key to keeping the aggregate revisions trend in positive territory, offsetting pressure on estimates elsewhere.

The Tech sector is one of the four sectors whose 2026 Q1 earnings estimates have increased since the start of October 2025; the other three sectors enjoying favorable revisions are Finance, Industrial Products, and Business Services.

The earnings big picture

The chart below shows expectations for 2026 Q1 in terms of what was achieved in the preceding five periods and what is currently expected for the following three quarters.

As noted earlier, the revisions trend for the current period (2026 Q1) has held reasonably well, as the chart below shows.

The chart below shows the overall earnings picture for the S&P 500 index on an annual basis.

The estimate revisions trend in the aggregate remains positive, even though there is plenty of churn at the sector level. Importantly, favorable revisions in the Tech and Finance sectors are helping offset pressures in other sectors.