Q3 Earnings: Key Trends and Stocks to Watch

A preview of lowered expectations and mixed results for financial, tech, energy and banking stocks 

• Early reports from the Q3 earnings season highlight strength and weakness, with the financial and technology sectors offering bright spots while energy and materials face challenges. 
• Analysts anticipate Q3 earnings growth will be more moderate than in Q2, before rebounding during the last quarter of the year. 
• Nvidia’s highly anticipated earnings report is expected Nov. 20.

Q3 earnings season kicked off on Oct. 11 with a wave of optimism as some of the nation’s largest financial institutions reported solid results. However, the outlook has since cooled. Earlier this week, cautious guidance from ASML Holdings (ASML) took some wind out of the market’s sails, tempering expectations for the quarter as a whole. This shift wasn’t entirely unexpected; analysts have been steadily lowering their estimates over recent months (illustrated below). 

Wall Street is anticipating blended year-over-year earnings growth of about 4.1% in Q3—down considerably from the 10% growth observed in Q2, FactSet reports. The downward trend reflects a tightening financial landscape, as companies navigate a complex landscape of mixed economic signals and global uncertainties.

Early disappointments in energy and materials

One of the key takeaways from the Q3 earnings season so far has been the early signs of weakness in the energy and materials sectors. Several major players have lowered expectations, foreshadowing potential challenges ahead.

Shell (SHEL) has already indicated a significant drop in its refining margins — down 30% from the previous quarter. It’s primarily because a saturated market is reducing demand and driving prices lower. Shell also expects weaker earnings from its chemicals and oil products division, suggesting the wisdom of a cautious outlook ahead of its Oct. 31 earnings report.

Likewise, ExxonMobil (XOM) provided disappointing guidance ahead of its Nov. 1 earnings release, warning of a potential $1 billion hit to upstream profits because of softer-than-expected oil prices and margins. The company also noted volatility in global energy markets could potentially shave another $200 million from its profits.

Meanwhile, the materials sector has not fared much better. Nucor (NUE), a leading steel manufacturer, revised its Q3 earnings outlook downward, with adjusted earning per share (EPS) now expected between $0.87 and $0.97—well below the $2.68 reported last quarter. Nucor attributed the adjustment to weaker-than-anticipated selling prices and reduced sales volume, underscoring the pressures facing the steel industry.

Adding to the underwhelming results, Moet Hennessy Louis Vuitton (LVHMF), a heavyweight in the consumer discretionary sector, also reported disappointing earnings on Oct. 16. 

Bright spots in the finance and tech, but clouds linger

Despite challenges, the financial and technology sectors have offered some bright spots in the Q3 earnings season—albeit with a few setbacks of their own. 

Financial heavyweights like JPMorgan (JPM) kicked things off Oct. 11 with a report that lifted investor spirits. Shares rose over 5% as the bank posted a 6% rise in revenue, driven by strong net interest income and trading gains. Citigroup (C) also exceeded expectations, posting earnings of $1.51 per share against an anticipated $1.31, with revenue at $20.3 billion, above consensus. The positive performances from JPMorgan, Citigroup, and others like Goldman Sachs (GS) and Bank of America (BAC) have highlighted the financial sector’s resilience amid shifting market conditions.

In the technology sector, Micron (MU) provided early optimism with Q2 earnings in August that beat expectations. The company reported $7.75 billion in revenue, alongside adjusted earnings of $1.18 per share. Micron’s guidance for Q3 sales also came in above analyst forecasts, driven by demand for AI-related memory products like DRAM and HBM. This positive outlook lifted Micron shares by roughly 15%, reflecting broader enthusiasm for AI-driven growth in the tech sector.

However, tech faced a setback on Oct. 15, when ASML Holdings (ASML) issued disappointing guidance. Despite solid Q2 results, ASML projected 2025 sales on the low end of its previous estimates, triggering a 15% drop in its stock and casting a shadow over the Nasdaq. The disappointing outlook from ASML has raised concern about whether this cautionary note is isolated to the company or could signal broader challenges for the sector as a whole.

What to watch

Looking ahead, plenty of high-powered reports have yet to be released. Examples include Netflix (NFLX), Tesla (TSLA), Meta (META) and Apple (AAPL). Details on these forthcoming earnings releases are highlighted below.

Netflix, Oct. 17

Expectations are high for the release tomorrow of Netflix Q3 earnings. Analysts forecast earnings of $5.10 per share on revenue of nearly $9.8 billion, which would mark year-over-year increases of 36% and 14%, respectively. Subscriber growth remains a focal point, with nearly 4 million additions projected, bringing the global total to 281 million.

Netflix shares have surged over 50% in 2024, and analysts anticipate the stock’s momentum could continue. Several firms, including Guggenheim Securities and Macquarie Capital, have recently issued bullish price-target upgrades, highlighting Netflix’s strong content slate and advertising revenue growth. If these positive catalysts align with the company’s Q3 performance, Netflix could see further gains in Q4, potentially extending its impressive run through Q4.

Tesla, Oct. 23

As Tesla approaches its earnings report, the company is expected to post revenue of $25.4 billion. In the previous quarter, the company posted revenue of $24.9 billion, with earnings per share at $0.91. While revenue is expected to increase slightly in Q3, earnings per share is projected to drop to around $0.58. 

This anticipated decline in EPS suggests Tesla’s aggressive pricing strategies, aimed at boosting sales volume, may be constricting the company’s profit margins. Last quarter, Tesla’s margins clocked in at around 18%, down from 18.2% in the first quarter. Based on those figures, the company’s profit margin will probably fall below 18% for the most recent quarter.

Those trends mirror some of the company’s efforts to sell more vehicles—sacrificing profitability for higher sales volume. For example, the company has unleashed an aggressive sales campaign in China, offering upfront discounts and zero-interest loans. Case in point, the China Passenger Car Association recently reported sales of Tesla vehicles during September were up about 19.2%, compared to the same period last year. 

Meta Platforms, Oct. 30

Ahead of Meta Platforms' Q3 earnings release, analysts are expecting a strong showing, with projections for earnings of $5.20 per share, representing an 18% jump from the same period last year. In recent quarters, Meta has consistently surpassed Wall Street expectations, driven by robust user engagement and advertising growth. 

For Q3, Meta has provided revenue guidance between $38 billion and $41 billion, while consensus estimates project a final tally somewhere in the middle—$40 billion. An analysis by Stifel suggests election advertising hasn’t been as strong as expected but has picked up recently, creating the possibility of an upside surprise in Q4. This optimism has led to a series of price-target upgrades, pushing Meta’s average analyst price target above $600/share. 

Heading into the Oct. 30 earnings report, investors will be hyper-focused on whether Meta’s substantial AI investments are starting to translate into higher growth. 

Apple, Oct. 31

As Apple approaches its fiscal Q4 earnings report, analysts are forecasting revenue of $94 billion and EPS of $1.58, marking year-over-year increases of 5.3% and 5.8%, respectively. This growth is fueled by demand for the new iPhone 16, especially the Pro models, which have performed well since their recent launch. Apple’s high-margin services segment, including iCloud and Apple Music, continues to be a major drive revenue, while its advances in AI and machine learning are enhancing user experiences and engagement.

However, Apple’s valuation remains a point of debate. Trading at around 35 times projected EPS, the stock is priced at a premium compared to its tech peers. The industry average is closer to 24. This has raised questions about whether future growth is already priced in, particularly after Berkshire Hathaway recently trimmed its Apple holdings. As the earnings date approaches, investors will be closely watching to see if Apple’s results and outlook justify the stock’s high valuation and can sustain its momentum.

Other notable earnings dates, including Nvidia

Other companies reporting earnings in the coming weeks include Amazon (AMZN), United Parcel Service (UPS), Alphabet (GOOGL), Eli Lilly (LLY), Microsoft (MSFT) and Nvidia (NVDA). These six are slated to report on the following dates, with some confirmed and others representing best estimates.

• Amazon: Oct. 24
• United Parcel Service: Oct. 24
• Alphabet: Oct. 29
• Eli Lilly: Oct. 30
• Microsoft: Oct. 30
• Nvidia: Nov. 20

Of particular interest is Nvidia’s report on Nov. 20. As the undisputed leader in AI chips, its results will be interpreted as a critical indicator for the broader AI sector. For more insight into the company’s recent financial performance, readers can check out this article on the tech giant’s results from last quarter.  

Andrew Prochnow has more than 15 years of experience trading the global financial markets, including 10 years as a professional options trader. Andrew is a frequent contributor of Luckbox Magazine.

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