Summary: As we noted previously (HERE), companies set conservative 2Q targets amid heightened economic uncertainty. Now, two weeks into 1Q26 earnings season, Wall Street analysts’ earnings revisions are following suit — NTM EPS revisions have flattened and are tracking at a slower pace relative to history. However, two areas stand out as potential opportunities: Banks are delivering strong EPS beats, and the rebound in Software stocks has outpaced the pace of analyst revisions, suggesting room for upward catch-up.
Since the end of January, analysts have been revising Software EPS estimates lower. Historically, around the middle of April (week 14) the percentage of analysts reducing estimates tends to decline. The prior year period followed a similar pattern. This suggests an opportunity: Wall Street analysts have kept Software estimates conservative and may need to catch up with EPS targets during this period of rapid price recovery.
In the opening weeks of 1Q26, S&P 1500 Banks delivered strong EPS performance. Nearly 95% of reporting banks have beaten estimates and no bank missing by more than 5%. So far this quarter, there are no extreme beat or miss outliers. To play strategically for the winner in Banks, please refer to 22V Head of Financial Research Bill Hebel’s Banks 1Q Preview (HERE).
At the index level, the 2nd-3rd week of an earning season is an essential week for S&P 500 revisions. The number of companies reporting increases significantly, and the pace of revisions tends to climb rapidly. So far Wall Street estimates for the 500 have been conservative.
94 S&P 500 companies are going to report next week. At the end of this report, we highlight the names with the best quantitative beat potential and those with the largest risk of missing.
SOFTWARE: Since the end of January, analysts have been revising Software EPS estimates lower. As we discussed (HERE), Software names have been trading together to a very large degree and a popular recent theme is that compute scarcity means a slower pace of software displacement. Historically, around the middle of April (week 14) the percentage of analyst reducing estimates tends to decline. The prior year period followed a similar pattern. This suggests an opportunity: Wall Street analysts have remained conservative and may need to catch up with EPS targets during this period of rapid price recovery.
Current-quarter net EPS revisions for Software remain at a depressed level, well below the 25th percentile historically. This suggests analysts have yet to meaningfully adjust their views on Software earnings.
So far in the first 16 weeks of 2026, Software is the industry group with the 2nd lowest percentage of positive analyst revisions. Only Autos have seen a lower percentage of analysts raising EPS estimates. As we stated two months ago (HERE), the heightened risk within Software names and weakening analysts estimates led to a sell-off in the space. The long-term headwinds remain in place, but the setup ahead of earnings is still positive.
BANKS: In the opening weeks of 1Q26, S&P 1500 Banks delivered strong EPS performance. Nearly 95% of reporting banks have beaten estimates and no bank missing by more than 5%. So far this quarter, there are no extreme beat or miss outliers. To play strategically for the winner in Banks, please refer to 22V Head of Financial Research Bill Hebel’s Banks 1Q Preview (HERE).
The 95% EPS beat rate for Banks is the highest level outside of the post-Covid recovery period, and both the EPS beat percentage and Sales beat rates sit well above their historical medians. While additional Banks report in the coming weeks may adjust these figures, performance is unlikely to move significantly below the median from here.
INDEX LEVEL: At the index level, steeping into the second week of the 1Q26 reporting revisions for all three indexes have flattened out. Small-Cap and Mid-Cap revisions are still well above their medians, while S&P 500 Earnings Revision are 1) in line and 2) have fallen in the 2nd week. Historically, the 2nd-3rd week of an earning season is an essential week for S&P 500 revisions. The number of companies reporting increases significantly, and the pace of revisions tends to climb rapidly. So far Wall Street estimates for the 500 have been conservative.
Compared with the prior quarter (4Q25), current EPS revisions are still leading on a cumulative basis. However, 4Q25 followed a different path: revisions ticked up beginning in the third week of earnings season and ultimately finished above the historical median. It is still too early to draw conclusions about how this season will end, but the first-week decline signals that Wall Street analysts entered the season with less conviction than they held in the weeks prior.
Across the three universes, the S&P 500 exhibits the mildest earnings revision dispersion — all sector revisions fall within a +5% to -5% range. Mid-caps and small-caps, by contrast, show more extreme sector-level moves, particularly in Energy and Comms. For example, SNX single-handedly drove a +44% upward revision in mid-cap Technology, and Tidewater (TDW) accounted for a +470% upward revision in small-cap Energy. Revisions of this magnitude are far less likely to occur within the S&P 500.
WEEK AHEAD: 94 S&P 500 companies are going to report next week. Below we list the names with high Earnings Quality Score with positive earnings sentiment, which used to have higher potential to beat.
And names with high Earnings Turbulence Score with negative sentiment score, which have a large miss rate.
