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Posted July 21, 2025 at 9:30 am
Last week, Wall Street’s biggest banks got the conversation started about the second-quarter US earnings season. But the talk will get really interesting in the week ahead. A crowd of companies is set to unveil brand-new numbers – from tech heavyweights Alphabet and Tesla to consumer staples like Coca-Cola and Philip Morris.
On the surface, this earnings season looks a bit sluggish: FactSet’s “blended” earnings growth rate for the S&P 500 – which combines the actual results for companies that have reported with estimated numbers for those that have yet to release their results – sits at 4.8%. And if that’s the actual growth rate, it’ll mark the index’s sleepiest pace since 2023. But don’t let that number deceive you. Companies have a long history of playing it cool with estimates, only to report better-than-expected results. In fact, that’s exactly what has happened in 37 of the past 40 quarters. Based on the average surprise over the last year, the final growth figure will likely land closer to a much more robust 9.5%.
Now, a hefty chunk of that growth story will rest on the shoulders of Big Tech – and the Magnificent Seven, in particular. That’s why the market will be leaning way in when Google-parent Alphabet unveils its results on Wednesday. Analysts are expecting a solid 10.7% increase in revenue versus a year ago. But investors will be digging into the details for signs that Alphabet’s heavy AI spending is lifting its cloud business (the company’s biggest growth engine). At the same time, they’ll also be watching nervously to see if the rise of Perplexity and other AI tools is starting to chip away at Google’s core search business – or if its own AI features are cannibalizing the ad dollars it gets from traditional search traffic.
US
Europe
Asia
US inflation accelerated to 2.7% in June – a quicker clip than expected – as tariffs started feeding into consumer prices. That’s left the Federal Reserve in a bind: the White House is pressuring it to cut interest rates, but sticky inflation makes that seem ill-advised. Investors are still betting on a rate trim later this year, but the inflation trend has just added a new layer of uncertainty.
ASML smashed expectations in its latest quarter, with nearly $9 billion in sales and strong new orders, but its warning about murky growth ahead sent its stock tumbling 11%. The Dutch firm – which dominates the market for cutting-edge chipmaking tools – stuck to its modest 15% growth target for this year and scrapped its previous optimism for 2026, citing economic and geopolitical uncertainty. That’s a big deal for a company that hasn’t seen revenue stagnate in over a decade. Still, with the US easing chip sales restrictions to China, demand could bounce back… and so might ASML’s fortunes.
TSMC – ASML’s biggest customer – delivered record-breaking quarterly results, meanwhile, with revenue and profit jumping 39% and 61%, respectively, over the last year. The world’s biggest contract chipmaker responded by raising its full-year sales growth forecast to 30%. Still, the company flagged some potential speed bumps ahead, including rising overseas expansion costs and a stronger Taiwanese dollar, which could squeeze its impressive profit margins. But investors mostly brushed off those concerns, sending the stock up 4% instead.
China’s economy posted surprisingly strong 5.2% growth last quarter, beating forecasts and staying on track to meet its full-year target of around 5%. The boost came as factories worked overtime and exporters front-loaded shipments to dodge potential US tariffs. But it wasn’t all good news: retail sales growth was disappointing, and the property market downturn continued to stoke deflationary worries. And that had analysts warning about a tougher second half of the year, as the exports rush fades, domestic weakness lingers, and trade tensions persist.
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Originally Posted on July 20, 2025 – Read The Room: Earnings Season And The Week Ahead
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