Early fourth-quarter earnings results show most U.S. companies continuing to deliver profit growth, though fewer are beating expectations as analysts raise the bar and investors demand stronger execution.
BNN Bloomberg spoke with Christine Short, head of research and global corporate events at TMX Datalinx, about sector performance, consumer-facing earnings, heavy technology capital spending and what investors are watching as peak reporting season unfolds.
Key Takeaways
- About 75 per cent of S&P 500 companies have beaten earnings estimates so far, below historical averages after analysts raised forecasts ahead of the quarter.
- Profit growth remains strong, with companies that beat expectations exceeding estimates by wider-than-average margins.
- Information Technology and Communication Services are leading earnings growth, while Consumer Discretionary, Health Care and Energy lag.
- Consumer spending appears more resilient in company results than in sentiment surveys, though upcoming reports will test that trend.
- Investor focus is intensifying on large technology firms as record capital spending faces scrutiny over whether growth can justify the outlays.
Read the full transcript below:
ANDREW: We’re about a third of the way through U.S. earnings season, so let’s zoom out and look at the big picture. Our guest specializes in U.S. equities and says early results suggest a market that’s resilient but increasingly demanding, with investors looking for strong performance. We’re joined by Christine Short, head of research and global corporate events at TMX Datalinx. Christine, it’s great to see you. You work for TMX Group, our stock exchange company, but your focus here is U.S. stocks.
CHRISTINE: That’s correct. I cover U.S. equities from New York.
ANDREW: Thank you very much for joining us. So the pattern we’ve seen is that a vast majority of U.S. companies so far this earnings season are beating expectations, but it’s actually a little behind the historical average.
CHRISTINE: Yeah. As you know, there’s this earnings game where analysts ratchet down estimates heading into the season, guided by companies themselves, and then we tend to have close to 80 per cent of S&P 500 companies beating bottom-line estimates. This quarter, we’re at about 75 per cent, so that’s running a little lighter than the one-, five- and 10-year averages.
However, coming into the season, instead of ratcheting down, the sell side actually bumped up estimates by about half a percentage point. So these companies had a higher bar to surpass. It makes sense that not all of them are beating at the same rate we usually see.
That said, the 75 per cent that have beaten are doing so by about nine per cent, which is running higher than the historical average. Some might characterize this earnings season as a little lacklustre because of the lower beat rates, but if you look at the magnitude of the beats, we’re doing quite well. Year over year, profit growth is around 12 per cent, marking the fifth consecutive quarter of double-digit growth for S&P 500 earnings, which is nothing to sneeze at.
ANDREW: Information Technology hanging in there, and Communication Services among the groups showing strong increases in profit.
CHRISTINE: Yes, those are the two leading sectors right now on both the top and bottom lines. Information Technology is up almost 30 per cent year over year in terms of EPS growth and beating by roughly 20 per cent on revenues. Communication Services is up about 10 per cent on both revenue and earnings.
The real laggards this season have been Consumer Discretionary, Energy and Health Care, which are expected to post negative year-over-year growth. That said, we did get some strong results from Pfizer and Merck today, so that could improve things slightly. We’re also about to get more consumer-facing earnings, so we’ll see if Consumer Discretionary can move out of the red.
ANDREW: We’re watching Uber, Chipotle and Yum! Brands. Consumer confidence in the U.S. hasn’t been that high, and lower-income groups have been hurt, even though tax cuts are coming.
CHRISTINE: That’s true, but if you look at companies that rely heavily on the consumer and have already reported, like Starbucks last week, they said they’re not seeing what’s being reflected in consumer sentiment surveys. They’re seeing traffic increase, and consumer spending behaviour isn’t necessarily matching what consumers are saying.
We’ll see if that holds true for Chipotle, Uber and others that rely on consumer behaviour. Obviously, the jobs picture makes a big difference. We were supposed to get the January jobs report on Friday, but because of the partial government shutdown, the Bureau of Labor Statistics says it won’t be released. Still, jobs have been holding up, and the consumer has been fairly resilient despite all the headwinds.
ANDREW: What should investors watch for when Alphabet and Amazon report?
CHRISTINE: That really rounds out the Magnificent Seven. We saw some mixed results last week. Microsoft beat on the top and bottom lines, but its fourth-quarter capital expenditures came in at $37.5 billion, the highest in the company’s history, which spooked investors a bit. Azure growth was up 39 per cent, but that fell short of expectations.
Investors want perfect or better-than-perfect results. You can’t miss expectations and then report record capex. So we’ll be watching those same dynamics with Alphabet and Amazon. There’s speculation Amazon’s 2026 capex could be around $150 billion. If growth justifies it, investors will reward that spending.
We’ll also be watching AWS closely, even as Microsoft and Alphabet continue to gain share. For Alphabet, it will come down to Google Cloud, advertising revenue and search, all of which have been boosted by AI investment.
ANDREW: Finally, there’s some interesting research suggesting that when companies move their earnings dates outside their normal reporting window, it can sometimes signal trouble. Walt Disney is one example, and investors weren’t thrilled with those results.
CHRISTINE: You’re referring to our proprietary metric, the Late Earnings Report Index, which recently hit its lowest reading in some time, suggesting CEOs were generally confident coming into this earnings season. They weren’t delaying as much overall.
That said, when large-cap companies that typically report on the same day each year move their date, even by a few days, it does raise questions. Investors wonder whether investor relations teams are trying to reshape the narrative or take additional time with the numbers. It forces a closer look at the report.
I won’t say there’s definitive academic research proving that delayed earnings always mean bad news, but there is a strong correlation, and at the very least, it warrants extra scrutiny.
ANDREW: Christine, thank you very much for joining us.
CHRISTINE: Thank you so much for having me.
ANDREW: Christine Short, head of research and global corporate events at TMX Datalinx.
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This BNN Bloomberg summary and transcript of the Feb. 3, 2026 interview with Christine Short are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.