When it comes to quarterly EPS revisions, analysts usually cut estimates. This has become a common routine on Wall Street — over the past 5 years, the average quarterly downward revision is 1.6%, over 10 years it’s 3.1%, and the 20-year average is even higher at 4.3%. The main goal is to leave enough room for listed companies to beat earnings expectations "easily" during earnings season.

But Q4 2025 broke the norm. The S&P 500’s bottom-up EPS forecast not only didn’t decline, it was actually raised by 0.5% — from an initial 7.1% year-over-year growth at the start of the quarter to 8.3%. This is the second consecutive quarter of positive revision after a slight 0.1% increase in Q3. In the past 20 years of historical data, such a situation is extremely rare.

Who are the main drivers? The information technology sector leads the way, with EPS estimates directly raised by 6.2%, and cash holdings increased by $17.9 billion, almost accounting for the majority of the overall upward revision. The financial sector contributed a 2.0% correction, but the other 7 sectors didn’t fare as well and are still being revised downward.

Interestingly, among the 108 companies that proactively issued Q4 guidance, 46% provided positive outlooks — exceeding the 42% average over the past five years. This indicates that corporate confidence in the market is quite strong. Such a scenario has only occurred once before in history: during the recovery phase after the 2021 pandemic. Now, this phenomenon is reappearing. Is AI really driving profit acceleration, or is this just another extension of valuation bubbles? The market is still observing.