The fourth-quarter earnings season is nearing completion, and Bank of America has identified several crucial trends for investors to watch. According to the bank’s analysis, approximately 75% of S&P 500 companies have reported their quarterly earnings results, revealing a mixed but generally positive picture despite ongoing concerns about artificial intelligence spending and economic uncertainty.
With nearly 70% of reporting companies beating consensus earnings per share estimates, the fourth-quarter earnings season has outperformed historical averages, Bank of America strategists noted. However, this beat rate of 70% represents a decline from the third quarter’s 75%, which marked the strongest performance since 2021.
Corporate Earnings Performance Exceeds Historical Benchmarks
Revenue growth has remained robust across most sectors during the latest reporting period. According to Bank of America, sales figures excluding financials and energy sectors are tracking toward the highest year-over-year growth rate since 2022, signaling underlying strength in corporate fundamentals.
Additionally, the bank’s predictive analytics team found that corporate sentiment reached record highs during the fourth quarter. By analyzing earnings calls and executive commentary, researchers discovered that positive sentiment surpassed even pre-Liberation Day levels, suggesting strong confidence among business leaders.
AI Spending Plans Dominate Investor Attention
Artificial intelligence capital expenditure emerged as a central theme throughout earnings season, with major technology companies announcing spending plans far exceeding Wall Street expectations. Hyperscalers’ AI spending guidance came in 35% above analyst estimates, according to Bank of America’s research.
Amazon revealed plans to spend $200 billion on AI infrastructure this year, while Alphabet and Meta announced expected outlays of up to $185 billion and $135 billion respectively. The strategists noted that while year-over-year capex growth is decelerating, 2025 capital expenditure plans were revised upward by approximately 30% from initial guidance.
However, investor reactions to these AI investment announcements varied considerably. Amazon shares plunged following its earnings report as the massive spending plans shocked market participants, while Meta’s stock performed better as strength in its advertising business offset concerns about elevated AI capex.
Labor Market Signals Present Mixed Picture
Employment trends during earnings season revealed conflicting signals about workforce dynamics. Job cuts in January reached their highest level since 2009, according to data cited by Bank of America, raising concerns about potential economic weakness ahead.
Meanwhile, the bank’s analysis highlighted more encouraging indicators beneath the surface. The Job Openings and Labor Turnover Survey layoff rate remains low, though hiring activity has declined, creating what analysts describe as a low-hire, low-fire employment environment.
In contrast to fears about technology-driven job displacement, Bank of America strategists said they found minimal evidence that artificial intelligence is meaningfully weakening overall labor demand. While “layoff” mentions increased during earnings calls, the broader employment picture appears more stable than headline figures might suggest.
Sector Performance Shows Wide Divergence
Corporate guidance for the coming quarters varied significantly across industries. Bank of America identified technology and healthcare as sectors providing the strongest forward-looking statements, while real estate and consumer staples offered weaker outlooks.
The strategists also noted that mentions of “weak demand” ticked higher during fourth-quarter earnings calls but remained well below levels seen throughout 2023 and 2024. This suggests companies are navigating a challenging but manageable demand environment.
As the remaining S&P 500 companies complete their earnings reports in the coming weeks, investors will continue monitoring whether the positive trends identified by Bank of America hold across the broader market. The sustainability of elevated AI spending and its eventual return on investment remain key questions for equity markets heading into 2026.
