UBS anticipates the S&P 500 earnings per share (EPS) will grow 8.4% year-over-year in Q4 2024, driven predominantly by the technology sector. While slower than previous quarters, UBS strategists expect final results to approach 12% growth, as historical patterns show upward revisions closer to reporting periods.

Key Observations on Q4 EPS Growth

Historical Patterns of EPS Revisions

EPS estimates often begin high, are adjusted downward before earnings season, and ultimately surpass expectations.
Q3 2024 demonstrated this trend, with EPS growth finalized at 8.9%, far exceeding the initial 4% estimate.
Unlike typical trends, Q4 estimates have remained flat over the past two months, suggesting resilience.

Technology Sector as the Growth Engine

TECH+ earnings are expected to grow 20.4%, a stark contrast to the 2.5% growth projected for non-tech sectors.
Top contributors to EPS growth include:

Nvidia (NASDAQ:NVDA): +62%
Amazon (NASDAQ:AMZN): +52.6%
Alphabet (NASDAQ:GOOGL): +26.1%

Moderate growth is forecasted for:

Microsoft (NASDAQ:MSFT): +6.9%
Apple (NASDAQ:AAPL): +11.6%

TECH+ contributes 5.2% to the overall S&P 500 EPS growth, accounting for seven of the top ten contributors.

Challenges in the Energy Sector

Energy EPS is expected to contract 27.5%, continuing its underperformance throughout 2024.
This decline offsets gains from other sectors, highlighting ongoing challenges in energy markets.

Broader Implications

The tech sector’s dominance underscores its critical role in driving market performance.
However, reliance on a single sector could pose risks, especially if tech companies face headwinds such as regulatory challenges or macroeconomic uncertainties.

Data-Driven Analysis with Relevant APIs
For investors and analysts, tools that provide real-time insights into earnings trends and sectoral performance are invaluable:

Earnings Calendar API: Stay updated on upcoming earnings announcements to track revisions and trends across sectors.
Sector P/E Ratio API: Evaluate valuation trends to understand sector-level earnings growth.

Conclusion
As Q4 earnings season approaches, UBS’s forecast highlights a tale of two markets: robust growth in tech juxtaposed with energy sector struggles. Investors should watch for revisions and focus on technology’s ability to sustain its leadership role in driving overall market performance.