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The US’ Q3 earnings season continues to unfold as companies listed on the US exchanges report their earnings, following a better-than-expected earnings round from major American banks last week. Tesla is set to be the first company among the infamous Magnificent 7 to report its Q3 earnings this week. Netflix will also be releasing its earnings for the latest quarter, following relatively good earnings reports in both Q1 and Q2 of 2025.
Financial reports of companies, especially giant US ones, work as important indicators of market trends and performance, as well as the overall health of the economy, given the central place businesses occupy in the economy.
When it comes to the most market-influencing sectors, the technology sector is considered a key player in driving the market to new highs these last three years. starting from October 2022, to be precise, when the so-called AI revolution took hold and advanced chatbots emerged.
As for individual stocks, Tesla’s and Netflix’s play a critical role. How so?
First, the weight that Tesla’s stock accounts for as part of the Nasdaq 100 index is 4.5%. Netflix accounts for 1.56% of the same index. Coming in the ninth and tenth places in weight in the Nasdaq 100.
Secondly, the fact that Tesla is amongst the seven giant US companies constituting the Magnificent 7 companies. Tesla is also on its way to reach a market capitalization of 1.5 trillion dollars for the first time in its history.
Therefore, a good earnings season for US tech companies will likely be a good push for the entire US market according to analysts, and the Nasdaq in particular, which has increased by over 50% since its last April’s low. This drives market optimism for potentially looser fiscal policies for the Trump administration, in addition to the continued AI revolution that is attracting global investments in the billions.
Everyone in the market is watching the Q3 earnings season unfold, currently being the biggest market driver and trend determinant, especially since economic indicators are out of the picture for the time being due to the US government closure since the beginning of October.
As a result, last quarter’s companies’ earnings reports and the speeches of their CEOs will have tremendous effects on the economy, investors, and all market participants.
The Q3 earnings season was kick-started with major US banks reporting their better-than-expected earnings across the board, driven by deal-making and asset management amid a robust stock market.
Despite banks anticipating a looming threat of lower rates in the near future, threatening to lower their profit margins, the good performance from the stock market since April is pushing banks forward.
The US’ largest asset holder bank, JPMorgan Chase, reported a 12% increase in Q3 profits, despite flat net income. CEO Jamie Dimon highlighted the company’s investment banking division as the main contributor to this growth.
As for Goldman Sachs, the world’s biggest investment bank, it reported a 39% increase in profits and a 42% increase in investment banking fees. CEO David Solomon noted that current market conditions remain highly unpredictable and require strong risk management.
Wells Fargo’s Q3 profits came at a 9% increase, driven by wealth management and investment growth. While Morgan Stanley’s profits grew by 45%, thanks to record Q3 revenues, with equity trading and banking services accounting for one-third of the bank’s operations.
Tesla will report its earnings after market hours on Wednesday, October 22, with its stock likely to face a test. Investors are optimistic about the company’s Q3 performance, expecting strong vehicle deliveries, progress in affordable car development, and record-breaking energy storage of 12.5 GWh during the last quarter.
This market optimism will be put to the test with revenue expected to have risen by 4% last quarter to 26.3 billion dollars. While Tesla’s profits are expected to fall for the fourth consecutive quarter by 24% compared to the same period last year, down to 54 cents a stock.
Video-streaming giant Netflix, valued at over $509 billion, will announce its Q3 earnings after market close on Tuesday. In the second quarter, the company reported 16% year-over-year revenue growth, reaching $11.08 billion.
As for now, analysts expect a revenue growth of 17.3% year-over-year for Netflix in Q3, to approximately $11.52 billion, with a projected EPS of $6.97.
If Netflix delivers as anticipated, this year’s third quarter will be a great one for the company, the same as it has been constantly for the last two years.
Disclaimer: The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.
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