Q3 earnings showed that the U.S. continues to lead global corporate performance, with profits rising 15% year-over-year (Y-Y) and more than 82% of companies beating earnings expectations. Revenue growth was solid at 8%, and significantly, earnings strength broadened beyond the big technology names. Companies outside the Magnificent 7 delivered their strongest earnings in more than three years, helped by better cost management, improving demand, and early signs of productivity gains from AI and automation. This widening of profit strength suggests that the U.S. recovery is becoming more durable and less concentrated.
Europe’s Q3 results were more mixed, but the forward outlook is turning materially more positive. Eurozone earnings were up 1% in Q3, with 57% of companies beating expectations. While 2025 may remain muted overall, there are several encouraging signals: Eurozone PMIs hit their highest level of the year (53), German (IFO) business sentiment is improving, and financing conditions are easing after a long tightening cycle. These factors tend to lead to earnings revisions by several months. Eurozone GDP growth is expected to nearly double by late 2026, with upside risk from better global trade conditions and stabilizing Chinese demand. Importantly, when excluding the unusually weak auto sector, the region’s underlying profit picture looks much healthier. For 2026, consensus EPS growth is currently 12% making Europe a positive surprise candidate for next year, particularly as cyclical sector growth accelerates.
Japan posted one of the strongest sets of results globally, with earnings up 21% Y-Y and 61% of companies beating expectations. A weaker yen supported exporters, and Japan benefited from a broad contribution across industrials, technology hardware, and consumer goods. While not as consistently strong as the U.S., Japan continues to show solid earnings momentum and healthy revenue trends.
In conclusion, the Q3 earnings season confirms that the U.S. remains at the center of global earnings strength – but it also shows that the backdrop is becoming less one-sided. With improving surveys, easing financial conditions, and significant base effects setting up for next year, Europe is positioned for a more meaningful profit rebound in 2026, while Japan maintains steady progress. For investors, the next phase of the earnings cycle may look more balanced, with global corporate profitability widening beyond the U.S. and mega-cap technology leaders.
DISCLOSURES
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The S&P 500 Index is a market capitalization–weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent US equity performance.
The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 17 countries of the European region.
Tokyo Stock Price Index, commonly known as TOPIX, along with the Nikkei 225, is an important stock market index for the Tokyo Stock Exchange (TSE) in Japan, tracking all domestic companies of the exchange’s Prime market division. It is calculated and published by the TSE.
The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.
