CNBC Panel Analysis: Strong Q3 2025 Earnings Season Performance and Market Outlook

This analysis is based on the CNBC Closing Bell interview [1] published on October 28, 2025, featuring Adam Parker of Trivariate Research, Lauren Goodwin of New York Life Investments, and Chris Hyzy of Bank of America discussing market expectations for the current earnings season.

The panel discussion centered on Adam Parker’s assertion that “investors are expecting a pretty good earnings season” [1], which current Q3 2025 data strongly supports. According to recent earnings season analysis, 87% of S&P 500 companies have reported actual EPS above estimates, significantly exceeding both the 5-year average of 78% and the 10-year average of 75% [2]. This represents the highest percentage of positive earnings surprises since Q2 2021 [2].

The earnings momentum is substantial, with companies reporting results that are 7.6% above estimates in aggregate [2]. The blended revenue growth rate for Q3 stands at 7.0%, marking the highest growth rate since Q3 2022’s 11.0% and representing the 20th consecutive quarter of revenue growth for the S&P 500 [2]. Forward projections remain optimistic, with analysts expecting Q4 2025 through Q2 2026 earnings growth rates of 7.4%, 11.9%, and 12.8% respectively [3].

However, market performance shows significant sector divergence [0]. Technology and Communication Services are showing positive momentum (+0.06% and +0.62% respectively), while traditional defensive sectors are under pressure, with Utilities down 2.59% and Real Estate declining 2.35% [0]. This suggests the market is differentiating between growth and value sectors, possibly reflecting interest rate sensitivity and AI-driven growth preferences.

The disconnect between strong earnings fundamentals and mixed market reactions reveals several critical insights:

1. Conservative Analyst Estimates
   : The high earnings beat rate (87%) [2] suggests that analyst estimates may have been overly conservative, potentially reflecting lingering economic uncertainty that is now proving unwarranted.

2. AI Investment Impact
   : While not explicitly detailed in the available interview content, the outperformance of Technology and Communication Services sectors [0] likely reflects continued AI-driven investment and productivity gains that are translating to earnings growth.

3. Valuation Concerns
   : Despite strong earnings, the S&P 500’s forward 12-month P/E ratio of 22.8 [3] remains elevated above historical averages, indicating that current valuations require sustained earnings growth to justify.

4. Sector Rotation Dynamics
   : The underperformance of rate-sensitive sectors (Utilities, Real Estate) [0] suggests ongoing monetary policy concerns are creating market fragmentation despite overall earnings strength.

The analysis reveals several risk factors that warrant attention:

• Valuation Pressure
  : With the S&P 500 trading at a forward P/E of 22.8 [3], any disappointment in earnings quality or forward guidance could trigger significant market corrections.

• Interest Rate Sensitivity
  : The underperformance of rate-sensitive sectors [0] suggests ongoing concerns about monetary policy impact that could affect broader market sentiment.

• Earnings Sustainability
  : While current results are strong, the ability to maintain this level of outperformance (87% beat rate) [2] historically diminishes as earnings seasons progress.

• Geopolitical Uncertainty
  : Trade tensions and global economic conditions could impact forward guidance, particularly for multinational corporations.

• Growth Sector Momentum
  : Technology and Communication Services continue to show strength [0], potentially benefiting from AI investment trends and digital transformation.

• Earnings Quality Focus
  : Companies delivering sustainable earnings growth with strong margins may outperform as investors differentiate between cyclical and structural growth.

• Forward Guidance Importance
  : Management commentary on Q4 2025 and 2026 outlook could provide catalysts for stocks demonstrating clear growth pathways.

Current Q3 2025 earnings season performance validates the panel’s optimistic expectations, with 87% of companies beating estimates by an average of 7.6% [2]. Revenue growth of 7.0% [2] represents the strongest performance since Q3 2022. However, elevated valuations [3] and mixed sector performance [0] suggest selective investment opportunities rather than broad market gains. The divergence between strong earnings fundamentals and cautious market reactions indicates investors are focusing on sustainability and growth quality rather than short-term performance.

while current earnings momentum is impressive, the market’s mixed reaction suggests caution regarding sustainability. The elevated forward P/E ratio of 22.8 [3] indicates that earnings growth must continue to justify current valuations. Sector performance divergence [0] suggests a more selective approach may be warranted, with focus on companies demonstrating sustainable growth trajectories and strong forward guidance.