Closing the Quarter: Q4'25

As we close out 2025 and look ahead, more and more companies are leaning into strategic growth. Capex is increasingly framed as targeted investment (automation, innovation, capacity) and M&A appetite remains robust as boards reassess portfolios and pursue scale, capabilities, and adjacent growth. All things being equal, the compounding effect of capex investment could support an inflection in 2026, with post-tax season consumer demand a key gauge of whether OBBBA stimulates activity. 

To that end, the consumer remains the clearest real-time barometer, and Q4 reinforced a subtle but important change in behavior. Spending isn’t broken, but it has continued to become more selective and more skewed toward essentials. Confidence measures softened into year end, and customers are still participating, just with a sharper filter: value first, substitute where possible. That dynamic is manageable, but it puts a premium on mix and pricing discipline and creates tighter expectations in 2026. At the same time, equity market performance continues to be a source of confidence for those who are lucky enough to be on the top of the K. 

AI continues to reset competitive baselines, but the market is now grading it with a tougher rubric. The narrative has matured from capability to accountability: where is the measurable productivity, what is the payback period, and how does incremental AI spend show up in margins and cash flow? At the same time, operating model implications are becoming more visible. Automation is compressing cycle times and headcount, and “efficiency programs” increasingly look like permanent redesigns and strategic imperatives rather than reactive cost-cutting actions. 

The stage is set for a seemingly productive 2026 with the main disruptor to success being geopolitics and policy. Can we just have a “normal” year? 

With Q4’25 earnings largely in the books, we “Close the Quarter” with some notable themes: 

1. Q4’25 Earnings Performance: Companies Post Solid Results as Earnings and Revenue Growth Exceed Expectations; Q1’26 Revenue and Earnings Estimates Average 8.0% and 12.2%, Respectively, Indicating a Sequential Decline; Still, Q1’26 Revenue is Projected to be 300 Basis Points Higher YoY, a Good Sign for Underlying Demand with Many Assuming a Pick-Up in the Back-Half 
2. Guidance Moves and Consensus Shifts: More Companies Narrowed Revenue Guidance Ranges, While EPS Forecast Trended Wider; As for Consensus, Consumer Staples, Financials, Industrials, and Tech See the Highest Share of Positive Revisions, while Energy and Communications Receive the Most Downward Changes 
3. Artificial Intelligence: Markets are Increasingly Pricing AI Through a Disruption Lens, While Companies Continue to Highlight Productivity Gains and Margin Expansion; Clear, Quantifiable, and Defensible AI Communication is More Critical Than Ever 
4. Cost Optimization: Companies Position Cost Optimization as a Multi-Year Strategic Imperative Rather than a Tactical Response to Inflationary Pressures, Tariff Headwinds, and Softening Demand Environments; Management Teams “Playing Offense” by Proactively Announcing Initiatives that Range from Structural Reorganizations and Workforce Reductions to Growing Deployment of AI-Powered Tools 
5. Capital Allocation: Cash Deployment Trends Remain Growth-oriented as M&A Activity Strengthens and Capex Remains Robust; Dividends Decline QoQ and YoY