As the second half of 2024 begins, market participants are beginning to reassess their expectations for revenue growth not only this year but also into 2025.
Wall Street analysts are predicting that S&P 500 companies’ earnings per share (EPS) will grow at a robust 14.5% in 2025.
This would be an impressive record following the 10.6% growth expected this year, according to analysts at Yardeni Research.
“We forecast S&P 500 earnings per share to grow 12.1% this year and 8.0% in 2025,” the financial research firm said in a recent report.
The range of forecasted earnings growth for next year is also noteworthy: analysts expect earnings to grow in all 11 S&P 500 sectors, and all but seven of the S&P 500’s 135 industries.
That broad-based growth has been a strong driver of future earnings — a time-weighted average of consensus operating EPS estimates for the current and next fiscal year — for the S&P 500. That earnings strength has helped power the S&P 500 price index’s 14.5% gain year-to-date through Friday’s close, Yardeni noted.
By sector, projected revenue growth for the S&P 500 will be led by information technology, which is expected to expand 20.2% in 2025 and 19.3% in 2024.
Healthcare is expected to grow 18.4% in 2025 and 8.4% in 2024, while the materials sector is expected to grow 17.4% in 2025 after declining 2.2% in 2024. The industrial sector is expected to grow 15.2% in 2025 and 5.7% in 2024.
Yardeni highlighted that the S&P 500 index as a whole is expected to grow 14.5% in 2025 and 10.6% in 2024.
Real estate is expected to see the slowest growth at 7.7% and 0.7% in 2025 and 2024, respectively.
Notably, Yardeni also said that some of the industries expected to see the highest growth in 2025 may be flying under investor scrutiny because they are expected to see minimal revenue growth this year.
For example, interactive home entertainment, which tops the 2025 revenue growth list with predicted growth of 46.5% in 2025 and 5.5% in 2024, falls into this category.
Other industries expected to see revenue growth improve sharply in 2025 from this year’s lows include copper (39.6% in 2025, 7.1% in 2024), paper and plastic packaging products (24.7% in 2025, -5.2% in 2024), personal care products (23.0% in 2025, -17.2% in 2024) and passenger aviation (20.3% in 2025, -3.9% in 2024).
Additionally, Yardeni analysts highlighted strong expectations for earnings growth in the range of 8.9% to 46.5% in 2025 for the eight mega-cap industry stocks, including Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, Nvidia, and Tesla.
The S&P 500 Semiconductor industry, led by Nvidia, is expected to grow the most at 38.8%.
Alphabet and Meta, both part of the Interactive Media & Services industry, are expected to see their revenue grow 40.1% in 2023, 32.1% in 2024, and 13.9% in 2025.
Amazon, which dominates the broad retail sector of the S&P 500, is expected to achieve revenue growth of 52.6% in 2024 and 25.8% in 2025.
Netflix, which is part of the S&P 500 Movie & Entertainment industry, is expected to see revenue growth of 27.3% in 2025, after posting massive increases of 65.9% in 2024 and 294.9% in 2023.
Apple, which belongs to the S&P 500 Technology Hardware, Storage & Peripherals industry, is expected to recover after a decline in 2023, with revenue growth of 8.8% in 2024 and 14.2% in 2025.
Revenue growth in the systems software industry, which includes Microsoft and Oracle, is expected to moderate to 12.9% in 2025 from 19.5% in 2024.
Finally, Tesla in the S&P 500 Automobile Manufacturers industry is expected to see modest earnings growth of 8.9% in 2025, after a slower 2.8% growth rate in 2024 and a 7.4% decline in 2023.
