Big Tech continues to defy earnings expectations: Barclays

Published 06/08/2025, 11:46
© Reuters.

Investing.com -- Big Tech is once again at the center of stronger-than-expected U.S. corporate earnings, according to Barclays (LON:BARC) analysts, who say the group is “still core to SPX earnings power” and is helping lift full-year forecasts.

In a recent U.S. Equity Insights note, Barclays wrote that “Big Tech continues to defy expectations,” reporting a 12% average earnings beat, 27% year-over-year earnings per share (EPS) growth, and a 190 basis point expansion in net profit margins. 

“FY25 consensus has rebounded to $267,” the analysts noted, after having nearly dropped to Barclays’ own $262 forecast in June. 

The upward revision has been driven by “beat-and-raises from Big Tech and Financials.”

The bank notes that two-thirds of the S&P 500 market cap had reported second-quarter results by last Friday, with 82% beating estimates, well above the long-term trend of 76%. 

The average earnings beat came in at 8.5%, led by discretionary names (boosted by Amazon (NASDAQ:AMZN)), as well as real estate and financials. Overall, EPS grew 8.5% year over year, with top-line growth of 5.3%.

However, Barclays warned that the broader market isn’t keeping pace. “SPX ex-Big Tech EPS growth looks like it’s slowing for the second straight quarter,” the analysts said.

They noted that sectors like materials, utilities, and healthcare are seeing downward revisions to FY25 estimates.

Despite valuation concerns, the S&P 500 now trades at around 23x next-twelve-month EPS and Barclays remains “constructive” on both Financials and Big Tech. 

“While ~29x NTM is high, the premium vs. SPX is modest, valuations are still down YTD and EPS estimates are improving,” the analysts wrote.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.