As the second half of 2024 begins, market participants are reassessing their expectations for S&P 500 earnings growth not only for this year but for 2025 as well.
Analysts on Wall Street predict that the S&P 500 companies will see a robust 14.5% earnings-per-share (EPS) growth in 2025.
According to analysts at Yardeni Research, this would mark an impressive follow-up to the anticipated 10.6% growth for this year.
“We’re forecasting S&P 500 earnings-per-share growth of 12.1% this year and 8.0% in 2025,” the financial research firm said in a recent report.
The forecasted breadth of earnings growth for next year is also noteworthy. Analysts expect all 11 sectors of the S&P 500 to experience earnings growth, along with all but 7 of the 135 S&P 500 industries.
Such widespread growth has been a strong driver of the S&P 500’s forward earnings, which is the time-weighted average of consensus operating EPS estimates for the current and following year. This earnings strength supports the S&P 500 price index’s 14.5% year-to-date gain through Friday’s close, Yardeni notes.
By sector, the expected earnings growth for the S&P 500 is anticipated to be led by information technology, with a 20.2% expansion in 2025 and 19.3% in 2024.
Health Care is anticipated to see an increase of 18.4% in 2025 and 8.4% in 2024, while the Materials sector is forecasted to grow by 17.4% in 2025 after a decline of 2.2% in 2024. Industrials are anticipated to grow by 15.2% in 2025 and 5.7% in 2024.
The S&P 500 overall is expected to grow by 14.5% in 2025 and 10.6% in 2024, Yardeni highlighted.
Real estate is expected to see the slowest growth of 7.7% and 0.7% in 2025 and 2024, respectively.
Notably, Yardeni also said that several industries with some of the strongest expected growth in 2025 may be flying under investors’ radar because they’re expected to have minimal earnings growth this year.
For instance, Interactive Home Entertainment, which tops the 2025 earnings growth list with a projected 46.5% increase in 2025 and 5.5% in 2024, falls into this category.
Other industries expected to see sharply improving earnings growth in 2025 from low levels this year include Copper (39.6% in 2025, 7.1% in 2024), Paper & Plastic Packaging Products (24.7% in 2025, -5.2% in 2024), Personal Care Products (23.0% in 2025, -17.2% in 2024), and Passenger Airlines (20.3% in 2025, -3.9% in 2024), among others.
Moreover, analysts at Yardeni highlighted strong earnings growth expectations for industries housing the MegaCap-8 stocks—Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, Nvidia, and Tesla—projected to range from 8.9% to 46.5% in 2025.
The S&P 500 Semiconductors industry, led by Nvidia, is expected to see the highest growth at 38.8%.
Alphabet and Meta, part of the Interactive Media & Services industry, are forecasted to grow earnings from 40.1% in 2023 to 32.1% in 2024 and 13.9% in 2025.
Amazon, dominating the S&P 500 Broadline Retail industry, is poised to drive earnings growth of 52.6% in 2024 and 25.8% in 2025.
Netflix, within the S&P 500 Movies and Entertainment industry, is projected to have earnings increase by 27.3% in 2025, after significant jumps of 65.9% in 2024 and 294.9% in 2023.
Apple, part of the S&P 500 Technology Hardware, Storage & Peripherals industry, is expected to recover with earnings growth of 8.8% in 2024 and 14.2% in 2025, following a decline in 2023.
The Systems Software industry, including Microsoft and Oracle, is forecasted to moderate its earnings growth from 19.5% in 2024 to 12.9% in 2025.
Lastly, Tesla, in the S&P 500 Automobile Manufacturers industry, is projected to see a modest earnings increase of 8.9% in 2025, following lower growth rates of 2.8% in 2024 and a decline of 7.4% in 2023.
