Mag 7 Will Be the Main Engine Driving Q4 Earnings Growth: What JPMorgan Expects

As the Q4 earnings season kicks off, investors need to shift their focus from Trump-related issues to fundamentals.

While consensus for S&P 500 growth is relatively conservative, JPMorgan offers a different outlook. In a report on Monday, analyst Mislav Matejka highlighted that surprise earnings will largely be driven by the Mag 7, which includes Apple, Nvidia, Microsoft, Amazon, Google, Meta, and Tesla.

Matejka forecasts a 22% growth for the Mag 7's earnings in Q4—slower than previous quarters, but still better than anticipated. Notably, the Mag 7 has exceeded expectations for seven consecutive quarters.

Though the earnings growth gap between the Mag 7 and other S&P 500 companies has narrowed, the absolute value of their growth remains significantly higher. Excluding the Mag 7, the broader S&P 500 is expected to see just 5% earnings growth, with the Mag 7 continuing to be the core driver of U.S. stock market performance.

Q4 earnings growth projections for the S&P 500 have been sharply revised downward in recent months, with the current year-over-year growth rate at only 8%, down from the 18% forecast at the start of last year.

However, the conservative outlook could have a positive effect on the market. Despite lower overall growth expectations, an acceleration in U.S. economic activity and typically positive seasonal factors in Q4 could lead to earnings that surpass predictions.

JPMorgan also notes that the U.S. economy is expected to grow 2-3% in real GDP terms in 2025, significantly outpacing Europe's 1% growth. This economic resilience will provide strong support for earnings growth in the U.S. stock market.