Over the last three years, members of the S&P 500 index have consistently reported earnings growth above estimates. Over that time, companies have reported on average 4 percentage points higher growth than consensus analyst estimates. So far during the reporting season for fourth quarter 2024 earnings, S&P 500 member companies have reported 12% year-on-year growth, versus 8% expected growth. Notably, the gap between the earnings growth of the Magnificent Seven companies relative to the remaining 493 is expected to narrow from 32 percentage points in 2024 to 6 in 2025. However, over the last year, consensus estimates for 2025 earnings of the Magnificent Seven companies have risen by 32% while estimates for the 493 have declined by 5%.
Source: Factset, Goldman Sachs, February 2025