Q1 2025 Earnings Deep Dive: Ten Corporate Signals for the U.S. Equity Market
Introduction: Navigating Crosscurrents with Earnings as a Compass
The first quarter of 2025 is a crucial moment for equity investors. With geopolitical friction re-intensifying following Trump’s return to the White House, and the Fed maintaining a cautious “higher-for-longer” stance, volatility is climbing. Yet amid political noise and macro uncertainty, fundamentals remain our best anchor.
To assess where U.S. equities might be headed, we analyze the Q1 earnings of nine major corporations from across finance, healthcare, technology, media, and transport. These are not just bellwethers by size — they are structural pillars of the global economy, revealing the real-time behavior of capital, consumers, and corporate strategy.
The central question: Are corporate earnings and forward guidance signaling rotation, deterioration, or resilience in the U.S. market narrative?
I. Finance: Steady Hands on the Wheel of Capital
Goldman Sachs (GS)
Q1 EPS: $14.12 | Revenue: $15.06B | ROE: 16.9%
Forward View: Focus on risk intermediation, record financing activity
Goldman delivered a reacceleration of core strength. The Global Banking & Markets division accounted for over 70% of firmwide revenue, with record equities and financing income, particularly in structured credit and derivatives. Meanwhile, Asset & Wealth Management showed positive flows (+$24B in AUS), but margin pressure due to markdowns in alternatives.
Outlook: Goldman maintains a bullish posture on market intermediation and sees a recovery in deal pipelines. The buyback program remains aggressive.
Market Signal: Institutional capital is returning to risk, favoring cyclical equities and alternative credit. The old investment bank model is alive and well — and thriving under volatility.
Citigroup (C)
EPS: $1.96 | Revenue: $21.6B | Net Income: $4.1B
Forward View: Broad-based growth, restructuring phase mostly complete
Citi showed strength across all business lines: Markets +12%, Wealth +24%, Advisory fees +84%. Expenses fell 5% YoY. CET1 at 13.4%. This quarter marked a turning point — the firm is back to growth mode, especially in international payments and FX-heavy verticals.
Market Signal: Citi’s global footprint and consistent revenue growth suggest robust cross-border activity and credit stability. Bullish for large-cap exporters and emerging market exposure.
Bank of America (BAC)
EPS: $0.90 | Revenue: $27.4B | Trading income up: 17%
Forward View: Stable NII, rising card charge-offs, continued market share gains
While credit metrics show soft stress (card delinquencies creeping above 4%), consumer spending is still growing, and equity trading outperformed. The bank is guiding for flat NII, but expects continued trading strength and steady capital return.
Market Signal: U.S. consumers are not broken, but spending patterns are normalising. Expect the broad market to hold up, but with sector rotations away from leveraged consumption.
U.S. Bancorp (USB)
EPS: $1.03 | ROA: 1.04% | ROTE: 17.5%
Forward View: Flat expenses, strong fee income, conservative credit
USB is executing well under a new CEO. Operating leverage was positive for the 3rd straight quarter. Noninterest income up 5%, thanks to gains in payments and wealth. Loans grew 2.1%, and net interest margin improved slightly to 2.72%.
Market Signal: Mid-tier banks are stable and disciplined, suggesting that systemic financial risk remains low despite regulatory noise. Bullish for regional bank ETFs and credit-sensitive equities.
II. Healthcare: Margin Pressure Meets Long-Term Growth
Johnson & Johnson (JNJ)
EPS (Adj.): $2.77 | Revenue: $21.89B | FCF: $3.4B
Forward View: Raised 2025 revenue to $91.6–$92.4B; EPS to $10.50–10.70
JNJ’s oncology pipeline is driving performance: DARZALEX, CARVYKTI, SPRAVATO all posted 20–100%+ YoY growth. Biosimilar erosion hit STELARA and INVEGA. MedTech grew 4.1%, led by cardiovascular devices (Abiomed, Shockwave). The $14B Intra-Cellular Therapies acquisition strengthens CNS exposure.
Market Signal: Healthcare is moving toward precision-led growth. JNJ’s numbers reinforce the defensive case for large-cap healthcare in a rotationary environment.
UnitedHealth Group (UNH)
EPS (Adj.): $7.20 | Revenue: $109.6B | ROE: 26.8%
Forward View (Revised): EPS $26.00–$26.50 (lowered)
UNH missed internal expectations due to higher-than-anticipated Medicare Advantage activity and Optum reimbursement mix changes. However, revenue grew $9.8B YoY. Self-funded commercial membership rose 700,000. Operating cost ratio improved to 12.4%.
Market Signal: Despite guidance cut, UNH’s fundamentals remain solid. Margin pressure is transitory, not structural, keeping healthcare a safe-haven equity sector.
III. Tech & Semiconductor Supply Chain: Leadership and Fragility
ASML
EPS: €6.00 | Revenue: €7.7B | Gross Margin: 54.0%
Forward View: 2025 revenue €30–35B; GM 51–53%; Q2 revenue €7.2–7.7B
ASML’s top line fell sequentially, reflecting order volatility, but margins expanded due to favorable EUV mix. Bookings fell sharply to €3.9B, from €7.1B in Q4. The firm acknowledges tariff risks, but sees AI-related demand offsetting macro drag.
Market Signal: Capex deferrals in semi equipment are real, but AI demand continues to underpin long-term growth. This supports AI infrastructure equities while flashing amber on cyclical hardware.
TSMC
EPS: $2.12 | Revenue: $25.53B | Gross Margin: 58.8%
Forward View: Q2 revenue $28.4–29.2B; GM 57–59%; tariff caution added
TSMC’s 3nm/5nm nodes now represent 58% of revenue, driven by AI and HPC demand. Despite seasonal smartphone softness, guidance for Q2 was stronger than expected. Management confirmed no current order cancellations due to U.S. tariffs — but warned of downside tail risks.
Market Signal: Semis are still in expansion mode, but tariffs could dent margins. Equities tied to Taiwan/U.S. production flow may see valuation volatility.
IV. Consumer & Media: Growth with Embedded Optionality
Netflix (NFLX)
EPS: $6.61 | Revenue: $10.54B | FCF: $2.66B
Forward View: FY revenue $43.5–44.5B; margin 29%; Q2 EPS $7.03
Revenue up 13% YoY; operating margin up to 32%. Ad revenue and pricing changes boosted ARPU, while global content (Taylor/Serrano, RAW, Adolescence) led engagement. Guidance unchanged, but CFO emphasized upside from USD weakness.
Market Signal: NFLX is quietly becoming a cash cow. Strong margin expansion with new ad/streaming content hybrid models creates a compelling case for growth-with-income portfolios.
Conclusion: A Resilient Quarter, But Policy Clouds Gather on the Horizon
From Wall Street trading desks to AI fabs in Taiwan and streaming services in Los Gatos, the Q1 2025 earnings picture is one of resilience through complexity. Margin discipline, strategic reallocation, and robust cash generation have largely absorbed the ongoing volatility in interest rates and geopolitics.
But this resilience comes with a caveat: the real impact of the 2025 U.S. tariff policy has not yet materialized in earnings.
While many companies acknowledged the tariff announcements in March and April, none reported order cancellations, cost shocks, or guidance revisions tied directly to trade restrictions. In fact, forward guidance for Q2 remains broadly stable or positive across sectors. That’s because the tariffs — whether on EVs, semiconductors, pharma inputs, or foreign services — are not yet fully defined in scope or implementation.
As analysts, we must distinguish between policy noise and policy consequences. The former has already reached the market; the latter will arrive with a lag.
For U.S. Equities:
• Q1 results confirm strong earnings baselines
• Tariff impact is a second-half 2025 story — especially for tech hardware, pharma supply chains, and global industrials
• Watch guidance updates in July–October for the true earnings impact of policy
In short: Q1 shows that the underlying economic engine is intact, and companies are navigating 2025 with strategic clarity. But investors should not misread silence as safety. The real stress test for equities will come when tariffs move from press releases to balance sheets.
Finally, regarding the main S&P500 index, so far for Q1 2025 (with 12% of S&P 500 companies reporting actual results), 71% of S&P 500 companies have reported a positive EPS surprise and 61% of S&P 500 companies have reported a positive revenue surprise. The forward 12-month P/E ratio for the S&P 500 is 19.0. This P/E ratio is below the 5-year average (19.9) but above the 10-year average (18.3).
