Q1 Earnings Season Begins This Week. Here's What to Expect.

First-quarter earnings season kicked off this week, and the outlook is increasingly positive for investors.

FactSet Research, which tracks S&P 500 company earnings, says year-over-year S&P 500 earnings growth for Q1 could be as much as 19%, which would be the highest growth rate reported by the index in more than four years (since Q4 2021, when earnings rose 34% due to the rebound from the COVID-19 crash).

That's a bit of a surprise, given that global oil prices spiked during the quarter due to the closure of the Strait of Hormuz, through which passes about a fifth of global oil supplies.

Image source: Getty Images.

Market headwinds from higher energy prices, however, were offset by tailwinds like the ongoing investment surge in data centers and artificial intelligence (AI) infrastructure, as well as higher-than-normal tax returns for Americans, driven by last year's "big, beautiful bill" legislative changes, which cut taxes for 2025.

Analysts say strong earnings growth should help keep the stock market buoyant amid an ever-changing, uncertain geopolitical landscape.

According to analysts at J.P. Morgan, "While geopolitical risk, policy uncertainty, and the energy shock have meaningfully widened the range of possible outcomes, the constructive earnings backdrop and improving valuations provide a solid foundation."

Big banks set the scene each earnings season

As usual during earnings season, the first week is dominated by the financials sector, as three-quarters of S&P 500 companies reporting in the first week are in that industry. The sector is expected to report the third-highest year-over-year earnings growth among the 11 S&P 500 sectors, at 15.1%.

On Monday, Goldman Sachs (NYSE: GS) reported its first-quarter results. Profits jumped 19% at the investment bank and beat Wall Street expectations. It was the company's best quarter for profits and revenue since early 2021, which bodes well for the larger financial sector.

Energy company earnings reports will also be closely monitored, as soaring crude oil prices driven by the war in the Middle East will be reflected in those results. Chevron (NYSE: CVX) reports on Friday, May 1.

Technology companies report later in April. Intel (NASDAQ: INTC), which has been on fire lately -- up 77% since the beginning of the year -- will report its quarterly results on Thursday, April 23. Investors will be watching that release closely.

Chipmaker Nvidia (NASDAQ: NVDA) doesn't report results until May 20, but that release will be closely scrutinized as well. Whether the company beats expectations or not, the company's results tend to move the entire market.

Those three sectors -- financials, energy, and tech -- will be critical if overall Q1 earnings are to hit the growth figures that FactSet predicts.

JPMorgan Chase is an advertising partner of Motley Fool Money. Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron, FactSet Research Systems, Goldman Sachs Group, Intel, JPMorgan Chase, and Nvidia. The Motley Fool has a disclosure policy.