While markets entered earnings season with concerns amid a volatile backdrop, it was another case where Wall Street distinguished itself from Main Street.

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Although there were plenty of headlines through April, in a month where tariffs and concerns about the global economic outlook dominated the narrative, another major event also took place. That is, the latest round of earnings season.


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Against all the odds, and defying much of the pessimism that has engulfed markets over the last couple months, results were broadly positive, reflecting a level of resilience that is particularly impressive.

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For starters, across the first quarter of the year, S&P 500 companies reported average sales growth of 3.8%.This was the 18th straight quarter where revenue growth was recorded. The nature of this growth was broad-based and robust across various industries, with seven out of eleven sectors posting positive sales growth.
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Adding to the top-line results was growth at the bottom line.

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In fact, while revenue increases were relatively modest, profits fared even better. As it were, earnings growth came in at 13.4% year-over-year.

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These figures tell us that companies have done well to navigate an uncertain quarter where it has been difficult to get a true reading on government policy, and to a lesser extent, the direction of inflation.

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Nonetheless, overall net profit margins for the benchmark S&P 500 index were 12.7%, which was an improvement against the preceding quarter, when said metric was 12.6%, and it was also higher than the relevant figure from a year ago, which clocked in at 11.8%. 

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Of course, it wouldn’t be earnings season if the mega-tech sector didn’t play a leading hand, as was the case yet again during the first quarter of 2025.

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In fact, the Information Technology and Communication Services sectors were the primary catalysts for growth across the market, with sector earnings increasing by 17.4% and 29.1% respectively.

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One surprising point rests in the fact that revenue growth across the tech sector, like the broader S&P 500, lagged earnings growth.

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This isn’t necessarily a bad problem, since it shows that companies have been able to optimise their operations and build out their margins.

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However, moving forward, the longer revenue growth remains modest, the deeper companies will need to search in order to harness the efficiencies that maintain their margins, let alone grow them.

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And with much uncertainty still dependent on macroeconomic factors, there is the prospect that revenue growth becomes harder to realise as companies lose flexibility over some of the cost controls in their business.

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Tech sector underpins growth

‍Focusing specifically on the tech sector, and the feats of big tech, it’s easy to see why earnings season was a success last month.

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Overall, this group provided the reassurances required to maintain the recovery that started to build momentum when the US government rolled back its position on individualised tariffs for every country around the world.

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On the whole, the tech conglomerates achieved a year-over-year earnings increase of 28%, which is a significant accomplishment given many companies were walking a tightrope of uncertainty.

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By way of comparison, the rest of the reporting S&P 500 constituents delivered earnings growth of 9% during Q1 2025. 

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As such, big-tech effectively tripled the growth rate of the rest of the market - and more than doubled the total growth rate for the S&P 500 - showcasing why these high-profile names command premiums to their valuations.
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In the case of Meta Platforms (META) and Microsoft (MSFT), these two companies were arguably the pick of the bunch from the tech sector, with both of the tech giants exceeding economists forecasts.

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When it came to Meta Platforms, the company also announced that it would be increasing its capital expenditure for the full-year, looking to capitalise on the artificial intelligence (AI) boom. 

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This is a decision that we took a particular liking to, as in our opinion, to date, Meta has underinvested in this area relative to its peers. It looks as though the market may have agreed as well, with META shares rallying in light of the news, even with the revised capex range now sitting at as much as US$72 billion.

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As far as Microsoft, it was hard to overlook the company’s Azure cloud division, where revenue growth was accelerating. Across this division, revenue increased by 22% over the year, providing hope that the company has entrenched its leading position in this field. 

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Elsewhere, Google parent company Alphabet (GOOGL) unveiled a 12% increase in revenue, which totalled US$90.2 billion. On top of that, the company managed to lift net earnings by 46% to US$34.5 billion. 

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At the heart of Alphabet’s robust growth figures were strong showings across its core services, which includes the likes of Search, YouTube, and AI segments.

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Perhaps the two mega-tech companies most exposed to ongoing uncertainty surrounding tariffs are Amazon (AMZN) and Apple (AAPL), which are both directly impacted, especially through their operational and production ties to China.

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So when Amazon reported mixed results, given this backdrop, we took the overall picture as a fairly positive story.After all, the company’s Amazon Web Services (AWS) division achieved a healthy operating profit margin of 35%, mitigating the drop compared to a year ago.

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Given the outlook for tariffs also seems to be improving - with China and the US having struck a deal - Amazon’s muted forward guidance also becomes less of a concern.

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It was a somewhat similar story for iPhone manufacturer Apple. In the rear-view mirror, its sales results were solid. But like Amazon, it sounded the need for caution in response to potential disruptions to its supply chain arising from tariffs. 

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Accordingly, Apple lowered its full-year iPhone revenue. But as per above, if the currently improving backdrop for tariffs persists, Apple may have softened expectations in a way that could allow it to come through the other side with its reputation in good stead.

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It’s a slightly different story at Tesla  (TSLA), where company-specific issues are at play for some of the operational weaknesses on show. However, by now, much of the selling should have taken this into account, including surging competition out of China, and an anti-Musk sales boycott.

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We’ve always maintained the valuation on TSLA is too high, and that’s why we have not invested in it - notwithstanding its growth. But with Musk stepping back from government duties, investors have found some optimism again.

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Last but not least, Nvidia (NVDA) is one name we’ll be watching very closely later this month when it reports. It is central to the AI revolution, and there is no denying it has been the flagbearer for revenue growth over recent years. We expect this to continue, even with external pressures requiring delicate attention over the short-to-medium term.