Second-quarter earnings season is wrapping up, and for wealth advisors tracking corporate fundamentals, the results carry a clear message: despite tariffs and persistent macro uncertainty, S&P 500 companies are delivering one of the strongest reporting periods on record.
Heading into this season, expectations were muted. Many investors braced for tariffs to eat into profits, supply chains to show cracks, and multinational earnings to falter under the weight of geopolitical friction. Instead, corporate America has again demonstrated resilience. Earnings growth has far exceeded consensus forecasts, margin stability has held firm, and forward guidance has surprised to the upside. For advisors, the implications are twofold: tariffs have not yet translated into a material drag on corporate earnings, and company fundamentals remain far stronger than sentiment suggested at the start of the year.
Goldman Sachs’ chief U.S. equity strategist David Kostin summed it up in an August 15 note: “Corporations have continued to message their ability to maintain their margins by negotiating with suppliers, adjusting supply chains, passing through prices to consumers, and cutting other costs.” Combined with a weaker U.S. dollar boosting overseas revenue, the result has been margin resilience few anticipated.
The data confirms it. Aggregate S&P 500 earnings grew 11% year-over-year in Q2 2025—nearly triple the 4% consensus expectation. Roughly 84% of companies beat Wall Street’s estimates, one of the highest beat rates on record. Even more telling, 58% of firms raised their full-year guidance, double the rate seen in the first quarter. For advisors evaluating positioning, this breadth of strength suggests earnings momentum is far from isolated to a handful of industries.
Technology once again dominated the conversation, with the so-called “Magnificent 7” reporting mostly strong numbers. Nvidia has yet to release its results, but peers delivered growth well above expectations. Excluding Tesla, which saw a meaningful revenue decline, the group posted a 26% year-over-year EPS increase in Q2, a 12% beat relative to consensus. As Kostin pointed out, mega-cap tech continues to act as a stabilizer for index-level earnings, not just meeting but handily exceeding projections. For clients heavily weighted toward technology, this reinforces the sector’s role as both a driver of growth and a cushion against volatility elsewhere.
Outside of tech, earnings resilience has been widespread. Industrials, healthcare, financials, and consumer discretionary names have all reported stronger-than-expected numbers, benefiting from improved supply chain efficiency, effective pricing power, and cost discipline. Even in areas most exposed to tariffs, companies have shown an ability to adapt. Advisors should note how corporates are leveraging multiple levers—whether by reconfiguring supplier relationships, localizing portions of production, or passing costs to customers—to offset tariff-related headwinds.
The market’s reaction has been equally important. While index valuations remain elevated, earnings strength provides a fundamental justification for current pricing. For RIAs concerned about stretched multiples, the latest reporting season offers reassurance that underlying earnings power is holding up. The S&P 500’s performance in 2025 has been supported not just by liquidity and momentum but by genuine earnings growth.
That said, there are caveats. While margin preservation has been impressive this year, Goldman Sachs cautions against extrapolating these results too far into the future. Kostin and his team argue that analyst forecasts for 2026 profit margins look too optimistic. The reasoning is straightforward: cost mitigation strategies have limits. Companies can only push suppliers so far, only raise consumer prices so much, and only trim costs to a point before growth itself is constrained.
For advisors, this represents an important distinction. Earnings momentum into year-end 2025 appears sustainable, with both small-mid caps and large caps expected to post steady sales growth. But looking further out, margin expansion is unlikely to be a reliable driver. The aggregate index will continue to benefit from the oversized contribution of mega-cap technology, yet broader-based margin gains seem improbable. This means advisors should temper client expectations for profit growth in 2026 and beyond, even as near-term earnings strength remains robust.
The bottom line for wealth managers: tariffs have not derailed corporate profitability in 2025, and the second quarter confirmed the durability of earnings across sectors. U.S. companies have adapted quickly, found ways to protect margins, and leveraged currency tailwinds to bolster global sales. The corporate narrative is one of flexibility and resilience, which should give advisors confidence in recommending equity exposure despite the noisy macro backdrop.
Still, it would be a mistake to dismiss tariff risks altogether. Their full impact may take longer to materialize, especially if trade tensions escalate or consumer behavior shifts under prolonged price pressures. Advisors should remain vigilant, stress-testing portfolios for scenarios where cost absorption becomes more difficult.
For now, however, the message is clear: Q2 earnings season has been a high point for U.S. corporates, and the S&P 500 has delivered one of the most positive reporting stretches in history. For clients, this underscores the importance of staying invested in equities, diversifying exposure across sectors, and recognizing that despite tariffs and political uncertainty, fundamentals remain solid. In a market defined by frequent headline risk, corporate earnings continue to tell a much stronger, more constructive story.
