Q1 2026 US Earnings Season Preview: Record Expectations Meet Geopolitical Risk
Published on April 14, 2026 by Fabien Yip, Market Analyst at IG
Overview
The upcoming Q1 2026 earnings season for the S&P 500 is set to showcase a remarkable 13.2% year-on-year earnings growth, marking the sixth consecutive quarter of double-digit growth. This estimate, the highest since Q2 2022, comes amidst rising geopolitical risks that could impact corporate performance.
Expectations and Historical Context
As of March 31, 2026, the consensus estimate for earnings growth is significantly higher than the previous quarter's estimate of 8.3%, which ultimately outperformed expectations with a 13.9% actual growth. If the trend of exceeding estimates continues, actual growth could reach approximately 19%, the strongest since Q4 2021.
Early reports indicate that 77% of the 22 companies that had reported by April 13 beat earnings per share (EPS) estimates, with an aggregate surprise of 14.3%. However, the high expectations mean that any shortfall in guidance could lead to severe market reactions.
Market Valuations
The S&P 500 is currently trading at 19.4 times forward 12-month earnings, slightly above the 10-year average but below the 5-year average. This valuation compression provides a more favorable entry point for investors, as positive earnings surprises could lead to significant upward adjustments in market multiples.
Geopolitical Risks
Unlike the previous year, where trade tariffs dominated discussions, the current earnings season is overshadowed by geopolitical tensions, particularly the US-Iran conflict that began on February 28, 2026. This conflict has led to an energy price shock, affecting costs across various sectors and potentially dampening consumer demand.
Investors are advised to focus on three key metrics during this earnings season: revenue beats, operating margin trends, and full-year guidance revisions, as these will provide insights into the underlying demand and cost absorption capabilities of companies.
Sector Performance
Eight out of eleven sectors are expected to report year-on-year earnings growth, with Information Technology leading at 45.0%, followed by Materials at 24.2%, and Financials at 15.1%. Conversely, the Health Care sector is projected to decline by 9.8%, primarily due to a one-time acquisition charge from Merck.
The Energy sector has shown volatility, with earnings growth estimates fluctuating significantly due to the impact of rising commodity prices and production disruptions. This highlights the importance of forward guidance in assessing the overall performance of the earnings season.
Earnings Calendar
The earnings season will unfold over the next six weeks, starting with financial giants like Goldman Sachs and JPMorgan Chase. The technology sector, including major players like Microsoft and Apple, will report in the final week of April.