Closing the Quarter: Q3'25

As we close Q3’25, the corporate and investor landscape reflects a balance of optimism and realism. Earnings broadly exceeded expectations, yet with macro headwinds persisting, sentiment has shifted toward “cautious growth”, one that rewards disciplined execution and clear, transparent communication.

The consumer, the engine of U.S. resilience, has become a growing concern. Persistent inflation, elevated rates, and political uncertainty have driven sentiment to historic lows, eroding purchasing power and confidence. While spending is not collapsing, demand is clearly tilting toward essentials and affordability — a shift that will continue to shape growth and guidance into 2026.

AI remains a defining force of transformation, now embedded as a structural pillar of business strategy and efficiency. Companies are translating AI investment into measurable gains in productivity, cost savings, and innovation. At the same time, the push for automation and efficiency is reshaping workforce structures, with layoffs reflecting a transition toward leaner, technology-enabled models built for scalability.

Looking ahead, rising capex and accelerating M&A signal companies’ intent to invest ahead of strength — positioning for long-term opportunity despite near-term uncertainty. Whether 2026 marks a true inflection point remains to be seen, but momentum toward growth through strategic investment is clearly building.

With Q3’25 earnings largely in the books, we “Close the Quarter” with some notable themes:

1. Q3’25 Earnings Performance: Companies Post Solid Results Relative to Expectations, with Earnings and Revenue Growth Each Exceeding 5-Year Averages; Analysts Forecast Strong Top-line Growth in the Final Quarter of 2025, Albeit a Stepdown from the Q3 Growth Rate
2. Guidance Moves and Consensus Shifts: Most Companies Raised Annual Revenue and EPS Outlooks, Marking the Highest Proportion of Q3 Raises Since 2021; As for Consensus, Tech, Healthcare, and REITs See the Highest Share of Positive Revisions, while Materials Stand Out as Seeing the Most Downgrades
3. Artificial Intelligence: AI Has Moved from Experimental to Enterprise Essential; Companies Highlight AI’s Role in Transforming Operations, Driving Efficiency, and Redefining Competitive Advantage across Industries
4. Layoffs: This Quarter Has Seen an Acceleration of Workforce Realignment as Companies Restructure around Efficiency, Automation, and AI-driven Transformation; Layoffs are Moving Beyond Transitory Economic Slowdown Cost-cuts
5. Consumer: Sentiment has Plunged to Near Historic Lows, as Persistent Inflation and Political Uncertainty Erode Confidence and Purchasing Power; Cautious, Value-driven Consumers are Reshaping Demand across Sectors
6. Capital Allocation: Cash Deployment Trends Show a Continued Shift toward Growth as Capex Sees an Increase both QoQ and YoY; M&A sees a Considerable Sequential Rise, while Share Repurchases Pull Back