A Turning Point in U.S. Markets? More Companies Raising Guidance Than Lowering It in May 2025

For the first time in months, a growing number of U.S. public companies are revising their earnings guidance upwards rather than downwards. Is this a sign that the market is stabilizing after a volatile start to the year?

The Numbers Are Telling a New Story

As of mid-May 2025, a total of 415 earnings reports have been released by publicly traded U.S. companies. Of those, 37 companies have raised their forward guidance, while only 18 have lowered theirs. This is a notable reversal from April, when 757 earnings reports were published—only 27 companies raised guidance, compared to 43 that revised it downward.

A Swift Shift in Sentiment

Within just one month, the tone of corporate earnings guidance has changed dramatically. While April was characterized by widespread caution and economic uncertainty, May shows early signs of renewed confidence. The data indicates that more management teams are optimistic about the rest of the year, even in the face of persistent macroeconomic headwinds.

What’s Driving the Optimism?

Several factors appear to be contributing to this positive momentum. Inflationary pressures have eased slightly, with the Truflation index showing a continuing deceleration in price increases. At the same time, signs of weakness in the labor market have reduced expectations of further monetary tightening by the Federal Reserve. Moreover, several major sectors—particularly tech, digital services, and consumer-facing industries—continue to outperform expectations, encouraging more bullish corporate outlooks.

Broader Market Expectations: Insights from the Institutions

J.P. Morgan Asset Management recently published its updated outlook for 2025, forecasting a 14% increase in earnings per share for the S&P 500. The growth, according to their analysis, is expected to be driven primarily by margin expansion. However, they also caution that evolving tariff policies remain a key risk to these forecasts, especially for industrial and materials-focused companies. Notably, the report also anticipates a recovery in the energy and healthcare sectors following a difficult 2024, aligning with the broader improvement in market sentiment seen in May.

Leading the Way: Which Sectors Are Pushing Guidance Higher?

So far, the strongest wave of upward guidance revisions has come from companies operating in semiconductors, cloud computing, and artificial intelligence. These firms are benefiting from increased capital expenditures and a renewed surge in enterprise demand. In contrast, companies in the energy and real estate sectors remain relatively cautious, reflecting volatility in commodity prices and sluggish demand in certain regional markets.

Looking Ahead: Will the Trend Hold?

Although the month is still in progress, the trend is clear. For the first time in several quarters, U.S. companies are expressing renewed confidence in their business outlooks. Should this pattern persist through the remainder of May, it could mark the beginning of a meaningful shift in investor sentiment heading into the summer months.