Earnings Takeaways: Q1 2025

Here are the latest insights from Goldman Sachs Research on key issues facing company management teams.

As the first-quarter earnings reporting season for the S&P 500 nears its end, Goldman Sachs Research has analyzed company earnings calls to provide insights into the key challenges and issues facing management teams.

Over Q1, three key themes emerged from these calls: (1) impact of tariffs, (2) the current state of the consumer, and (3) impact of artificial intelligence (AI). Here are the takeaways.

Key themes heard on company earnings calls

1. Impact of tariffs on businesses

Tariffs were top of mind during the Q1 earnings calls with 89% of companies mentioning “tariffs,” as uncertainty about trade policy surged. Some companies stressed that the 90-day delay of reciprocal tariffs created additional uncertainty, while other companies reassured investors that the impact of tariffs on their business is limited.

Many companies discussed various strategies to deal with tariffs ranging from taking actions on the supply chain to passing the cost to consumers.

It’s notable that a slightly lower proportion of firms than usual offered guidance. For companies that did offer guidance, many maintained their previous guidance or mentioned that their guidance does not include the potential impact of tariffs. This is reflective of corporate’s hesitancy to shift or provide guidance due to uncertainty around tariff policy.

2. The state of the consumer

Company commentary has reflected increasingly negative sentiment regarding the state of the consumer. Hard economic data (measurable performance such as GDP, inflation, and retail sales data) have not shown any signs of a significant growth slowdown in the past couple of weeks. However, Goldman Sachs Research economists pointed out that there is often a delay, as these data tend to be backward-looking before economic shocks are reflected in hard activity data.

In contrast, the soft economic data (such as sentiment and expectations from consumer surveys) have weakened: Consumer sentiment for top and bottom incomes have significantly decreased to levels below those during COVID.

Some companies noted the drop in sentiment has not affected the activity of the consumer, while others highlighted weakness in the consumer.

3. AI: continued enthusiasm

The share of companies mentioning AI during this quarter’s earnings calls declined slightly to 44% (compared to 48% from the previous quarter).  On AI, company management continued to express enthusiasm, with a few firms noting that AI has led to tangible cost reductions and productivity enhancements.

Some large tech companies reiterated their confidence in the long-term growth opportunities in AI through significant additional capital expenditure (capex) investments.

Outside of hyperscalers, “AI Phase 3” companies, or those with the potential to monetize AI by generating incremental revenues primarily in software and IT services, discussed the growth in demand and revenues from their AI-enabled products and services. 

Looking ahead

Company management has been particularly focused on the risk of recession and the potential impact of tariffs, as consensus earnings per share (EPS) revisions have turned negative in recent weeks, even though they remain above levels reached in recent recessions.

Goldman Sachs Research will be closely monitoring hard economic data for clues on how tariffs are impacting the health of the economy.