Q2 Earnings Preview Summary
Date: 7 July 2026
Author: Kathleen Brooks, Research Director UK
Key Takeaways
- European earnings are expected to be boosted by the energy sector.
- Analysts are optimistic about the upcoming US earnings season.
- The US market may face challenges despite its current success.
- Tech sector performance will be crucial for US earnings growth.
- The stock market outlook shows a divergence between US and European indices.
European Earnings Growth
Europe is anticipated to experience a strong quarter of earnings growth, with expectations of a 12% year-on-year increase. This follows the strongest earnings growth in three years during Q1. A significant contributor to this growth is the energy sector, where earnings are projected to rise by 84% year-on-year. Excluding energy, the growth rate is a modest 3%.
Other sectors such as chemicals, industrials, and banking are also expected to report solid earnings, while consumer-facing sectors like autos and discretionary stocks may struggle.
Energy Sector's Role
The sustainability of energy sector earnings is under scrutiny, especially given the volatility in oil prices influenced by geopolitical events. Analysts are cautious about the future outlook for energy earnings and the broader European market until corporate guidance is released.
US Earnings Season Outlook
In the US, analysts are optimistic, forecasting a 23% earnings growth for the S&P 500 in the upcoming quarter. This optimism is supported by a significant number of companies providing positive earnings guidance, which is double the historical averages.
However, there is a risk that if earnings do not meet expectations, investor sentiment could decline. The energy and tech sectors are highlighted as key drivers of growth, with tech seeing an 8% increase in earnings estimates.
Concerns for the Tech Sector
While the tech sector is expected to perform well in Q2, there are concerns about its long-term sustainability. Recent developments, such as Samsung's mixed earnings report, raise questions about the future of tech earnings. Additionally, rising costs associated with AI infrastructure could impact profitability.
Stock Market Performance
The US stock market has shown remarkable performance, with the Nasdaq achieving its best quarter in over five years. In contrast, European indices have lagged, although some countries like Italy and Greece have outperformed the US. The outlook for European stocks may depend on the performance of US tech earnings in the coming weeks.
Conclusion
The upcoming earnings season presents a mixed picture, with strong growth expected in both Europe and the US, particularly from the energy and tech sectors. However, the sustainability of this growth remains uncertain, and market participants will be closely watching for guidance from corporate earnings reports.