Earnings Takeaways: Q4 2024

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

As we close out the last quarter of 2024 earnings season, Goldman Sachs Research analyzed company earnings calls to gain perspective on key issues facing company managements.

Over Q4, three key themes emerged from these calls: (1) impact of tariffs, (2) a stronger US dollar, and (3) 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 Q4 earnings calls, where companies discussed their plans to accommodate potential policy changes under the Trump administration. Some companies were hesitant to act as uncertainty remains surrounding specific tariff policies.

For the companies who chose to be preemptive of the policies, they discussed a wide range of solutions ranging from pre-ordering items to get ahead of the tariffs to passing on the cost to consumers.

Corporate managements – particularly from companies with direct exposure to Canada, China, and Mexico – reassured investors with plans for managing these new economic conditions.

2. A stronger US dollar

The trade-weighted US dollar strengthened by 6% during Q4 driven by a combination of strong US economic growth, solid US asset returns, and the threat of tariffs. These drivers pushed up the dollar through the beginning of this year.

The share of S&P 500 companies that mentioned foreign exchange (FX) has risen across the last earnings calls. Companies are concerned that a stronger dollar will have negative impact on their international sales and act as a headwind to their overall sales and earnings estimates.

Goldman Sachs strategists forecast the trade-weighted dollar will appreciate by 3% over the course of 2025. However, they cite potential solutions for corporates to mitigate the headwinds from a stronger US dollar including FX hedging and reporting results in constant currency.

3. AI: continued enthusiasm

The share of companies mentioning AI during earnings calls reached a new high in Q4 at 50%. After the performance of China’s DeepSeek R1 model, mega cap technology companies highlighted the potential benefits of the recent developments in AI.

A basket of companies with the potential to monetize AI and boost their earnings from widespread AI adoption have outperformed the equal weight S&P 500.

Meanwhile, the companies with the potential to monetize AI by generating incremental revenues – primarily in software and IT services – are starting to capitalize off their AI investments, deploying tools internally and into their products. This allows employees and customers to benefit.

Looking ahead

Company managements are facing a conundrum over tariffs – if they decide to absorb the higher costs needed to produce the product or service, then profit margins would be squeezed. If companies pass along the higher costs to its end customers, then sales volumes may suffer. Firms may try to push back on their suppliers to absorb part of the cost of the tariff through lower prices.