Earnings Scoreboard - The fabrication layer: making the AI cycle

Who’s scoring highest and why

From 6 May to 11 May, 124 S&P 500 companies (including 2 Dow Jones Industrial Average constituents, McDonald’s and Walt Disney) reported earnings. According to FactSet, with 87.4% of the S&P 500 constituents having reported as of 8 May, the blended Q1 earnings growth rate has accelerated to 27.7%, more than double the 13.1% pace anticipated at quarter-end and the highest quarterly growth rate since Q4 2021, when the index posted 32.0%. Revenue growth has likewise climbed to 11.3%, the strongest top-line print since Q2 2022. The blended net profit margin of 14.7% is on track to be the highest since FactSet began tracking the metric in 2009. Furthermore, 83.2% of reporting companies have beaten EPS expectations against the prior four quarter average of 78.1%. The aggregate earnings-surprise factor of 20.7% is the highest since Q1 2021.

While the S&P 500 has recorded back-to-back weeks near record highs, last week's earnings produced a more nuanced story beneath the surface. Last week’s earnings reinforced a visibly bifurcated consumer backdrop. Results from McDonald’s and Marriott were constructive, while Airbnb and DoorDash delivered strong operational execution. Taken together, however, the releases point to a K-shaped dynamic that is not dissipating and may be becoming structurally entrenched. Lower-to-middle income consumers are increasingly deferring discretionary purchases, while premium and experience-led categories continue to outperform, supported by superior pricing power as well as volume.

The energy outlook became more complicated. Constellation Energy’s Q1 results provided the first full-quarter confirmation that the Calpine acquisition is delivering the EBITDA scale management guided, even as the broader power- infrastructure backdrop continues to be shaped by oil prices that remain structurally elevated in the wake of the Iran conflict. Mosaic’s EPS miss added a second, and more cautionary, datapoint. It underscored that the energy shock is transmitting beyond jet fuel and freight into fertiliser inputs, trade-route disruption and commodity pricing, a chain of effects that has not yet been fully reflected in sector consensus estimates.

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