Trading your first earnings release? Here’s what to expect for US Q2 earnings

The US corporate earnings season is the ultimate testing ground for traders. Four times a year, public companies open their financial closets, exposing their successes, failures, and future outlooks to a highly reactive market.

As we approach the Q2 2026 US earnings session, market stakes are exceptionally high. According to FactSet data, the estimated year-over-year earnings growth rate for the S&P 500 is an impressive 21.9%. If realised, this will mark the seventh consecutive quarter of double-digit earnings growth for the index. Meanwhile, estimated year-over-year revenue growth is projected at 12.0%, the highest since Q2 2022.

For a beginner, entering this environment can feel like stepping onto a high-speed train. To trade earnings successfully, you must understand what an earnings release contains, how the announcement day unfolds, and how to protect your capital from the intense volatility that follows.

EPS is the definitive measure of a company’s profitability. It is calculated by dividing the company’s net income by its total number of outstanding common shares.

• The baseline: Analysts establish a “consensus estimate” for EPS before the release. Beating this estimate is called an “earnings beat,” while falling short is a “miss.”

• Q2 2026 context: For the Q2 2026 session, Wall Street analysts have been atypically optimistic. Rather than lowering EPS expectations as the quarter progressed, as they historically do by an average of 2.0% to 2.7%, analysts revised S&P 500 Q2 earnings estimates upward by 3.2%.¹

Based on the latest FactSet Earnings Insight report dated 12 June 2026, the earnings growth rate for the S&P 500 is 21.9%, up from 18.7% pencilled in previously on 31 March 2026, led by Energy (121.9% y/y), Information Technology (59% y/y), and Materials (35.6% y/y), while the worst laggards are Consumer Staples (4.8% y/y), Financials (4.2% y/y), and Health Care (-8.1% y/y) (see Fig. 1).

If 21.9% is the actual growth rate for the second quarter, it will mark the second-straight quarter of earnings growth above 20% for the S&P 500, where Q1 saw an earnings growth rate of 28.8% y/y.¹

Revenue is the total amount of money a company brings in from sales before expenses are deducted.

• The baseline: A company can sometimes “beat” on EPS by cutting costs or buying back shares, but revenue growth proves whether there is actual customer demand for its product.

• Q2 2026 context: S&P 500 revenue growth is currently estimated at 12.0%, revised upwards from 9.4% on 31 March 2026. All 11 sectors are projected to report positive year-over-year revenue growth, led by Information Technology (33%), Energy (28%), and Communication Services (13.9%). The laggards are Materials (7.2%), Consumer Discretionary (7.1%), and Health Care (+4.6%) (see Fig. 2).

Forward guidance is management’s official forecast of its own future earnings, revenues, and capital expenditures. While EPS and revenue look backwards at the previous three months, guidance looks forward to the next quarter and the full year.

• The baseline: Forward guidance is often more influential than current results. A company can post record-breaking EPS in the previous quarter, but if management lowers guidance for upcoming quarters, the share price may plunge.

• Q2 2026 context: Ahead of the Q2 US earnings announcements, corporate confidence has been exceptionally strong. Out of 109 companies issuing Q2 EPS guidance, 57% have issued positive guidance, which is well above the 5-year and 10-year averages of 41% (insert footnote). Notably, 68% of these positive guidance updates have come from the Information Technology sector.¹

To spot potential trading opportunities, you must look beyond the broad index and analyse sector-level performance. Different sectors exhibit vastly different growth trajectories, profit margins, and valuations.

• Energy (the growth leader): Energy is projected to post the highest year-over-year earnings growth rate among the eleven sectors, at an astounding 121.9% (up from 48.3% expected on March 31). Elevated crude prices heavily support this boom; oil averaged $96.87 per barrel in the first quarter of 2026, a 52% surge from the year-ago average of $63.68.¹
  
  Major sub-industries like Refining (+205%), Integrated Oil (+160%), and Exploration & Production (+114%) are driving this expansion, led by heavy upward revisions to Chevron, ExxonMobil, Occidental Petroleum, APA Corporation, and Diamondback Energy.¹
  
  Interestingly, despite this massive earnings growth, the Energy sector has experienced an 8.2% decline in share prices since 31 March 2026, suggesting a potential valuation mismatch, given its forward P/E of just 13.5.¹
  
  Also, a point to note is the latest revenue and/or earnings guidance, due to the US-Iran interim peace deal, finalised during the week of 15 June 2026, which in turn triggered a decline in WTI crude oil below $80/bbl.

• Information Technology (the margin and guidance leader): Tech is anticipated to report the second-highest earnings growth at 59.0%. However, this is a highly top-heavy story: the Semiconductors & Semiconductor Equipment industry alone is expected to grow by 120%, and excluding semiconductors drops the broader sector’s growth rate to 25.5%.¹
  
  IT holds the highest percentage of “Buy” ratings from Wall Street (69%) and dominates corporate optimism, issuing 68% of all positive Q2 EPS guidance updates. Furthermore, its estimated net profit margin of 30.5% sits well above its 5-year average of 25.3%.¹

• Materials (the resurgent underdog): Materials is projecting the third-largest year-over-year earnings growth at 35.6%, driven by robust recoveries in Metals & Mining (+45%) and Chemicals (+43%).¹

• Health Care (the laggard): The sole sector projected to experience a year-over-year decline in corporate earnings. Its Q2 net profit margin is estimated to contract to 7.1% (from 8.1% a year ago), a steep drop below its 5-year average of 9.0%.¹

• Valuation & sentiment mismatches: The forward 12-month P/E ratio for the S&P 500 stands at 20.1, slightly above its 10-year average of 19.0.1 Valuations remain highly polarised: Consumer Discretionary sits at the top with a forward P/E of 25.3, while Energy (13.5) and Financials (14.7) sit at the bottom.¹
  
  From a sentiment perspective, while tech is highly favoured, analyst enthusiasm is at its lowest in Consumer Staples, which accounts for just 42% of “Buy” ratings.¹

Earnings announcements do not happen during normal market hours. To maintain a fair playing field, companies release their financial reports either before the opening bell or after the closing bell. The event unfolds in a highly structured, chronological order.

Companies are generally classified by when they release their numbers.

• Before market open (BMO): Reports are typically published between 6:00 AM and 8:30 AM ET. The price discovery is highly compressed, as algorithms parse the press release instantly and institutional traders build liquidity ahead of the 9:30 AM ET regular session open.
  
• After market close (AMC): Reports are published between 4:01 PM and 5:00 PM ET. AMC releases allow for an extended overnight digesting period. However, trading during after-hours (until 8:00 PM ET) and pre-market (reopening at 4:00 AM ET) carries significant risks, including lower liquidity, limited market depth, and vastly wider bid-ask spreads.

Roughly 30 to 60 minutes after the data release, the company hosts a live webcast. The CEO and CFO read prepared statements expanding on the raw numbers, offering colour on product margins, regional demand, macro headwinds, and structural progress.

The final 30 minutes of the conference call are reserved for an interactive Q&A session. Wall Street analysts from major investment firms ask unscripted questions. Analysts probe for weaknesses, such as inventory build-ups, slowing customer acquisition, or conservative margin assumptions. Sharp changes in share direction frequently occur during this Q&A as executives inadvertently reveal soft spots or hidden strengths.

The final 30 minutes of the conference call are reserved for an interactive Q&A session. Wall Street analysts from major investment firms ask unscripted questions. Analysts probe for weaknesses, such as inventory build-ups, slowing customer acquisition, or conservative margin assumptions. Sharp changes in share direction frequently occur during this Q&A as executives inadvertently reveal soft spots or hidden strengths.

• The run-in: Heading into June 3, optimism was reaching a fever pitch. Shares of Broadcom had rallied over 40% year-to-date and hit an all-time intraday high of $495.00 on June 3 during the normal US session (see Fig. 3). Oppenheimer reiterated its buy rating and raised its price target to $450, citing an expected earnings beat.²

• The AMC release: At 4:01 PM ET on June 3, Broadcom dropped its Q2 results. The headline figures were objectively spectacular.
  
  Net revenue: Record $22.2 billion (up 48% YoY), beating estimates of $22.13 billion.
  
  Non-GAAP EPS: $2.44, beating consensus estimates of $2.40.
  
  AI semiconductor revenue: $10.8 billion (up 143% YoY), representing nearly half of Broadcom’s total revenue.^{5 6}
  
  Guidance: Q3 FY26 revenue guidance was raised to ~$29.4 billion (an 84% YoY increase).⁶

• The call and Q&A: During the call, CEO Hock Tan revealed a $30 billion plus AI backlog and strong custom silicon momentum. However, he decided to keep Broadcom’s long-term fiscal 2027 AI revenue target unchanged at “in excess of $100 billion” rather than raising it. Furthermore, a minor software segment revenue figure ($7.2 billion) came in slightly light against the loftiest buy-side projections.⁷

• The post-earnings reality: Despite beating consensus expectations and raising near-term revenue guidance, the share plunged 15% after-hours on June 3 (see Fig. 4). The next day, June 4, the share closed 12.59% lower at $418.91, marking its worst single session decline in over a year (see Fig. 3).

Why the massive drop? Because the “AI trade demands perfection”. When a share has run up extensively, consensus estimates are only the baseline. Institutional investors may trade on “whisper numbers” (unofficial, higher expectations).

For instance, while Broadcom guided Q3 AI revenue to $16 billion, aggressive analysts had whisper numbers as high as $17.5 billion.8 Because Broadcom met consensus but missed these extreme whisper expectations, and did not raise its 2027 AI target, investors chose to “sell the news”.⁷

Read more: A trader's guide to earnings season: What is it and how do you trade it?

Volatility during earnings is often twice or three times a share's normal daily movement. Therefore, prudent downward adjustments to your position sizing are warranted.

• The 1% rule: It is generally advised that no more than 1% to 2% of your total liquid account equity is risked on any single earnings trade.
  
• Reduce position sizes: For example, if your standard trade size is $2,000 under normal market conditions, consider reducing your earnings trade size by 30% to 50% (to $1,000 or $500) to account for a potential for volatile conditions. High-beta shares reporting earnings require even smaller allocations (0.5% to 1%) because of their wider price swings.
  
• Calculate stop-loss distances: Stop-loss placement can be assessed on key technical levels or indicators such as the Average True Range (ATR) before entering the position. Use this distance to mathematically determine how many shares to trade.

By most metrics, the safest way for a beginner to trade earnings season is to avoid holding positions through the actual release. Instead, practice trading the reaction. Many traders prefer to wait 30 to 45 minutes after the opening bell, as this typically allows the initial market volatility to settle. By this time:

• The initial algorithmic and emotional trading has settled.
  
• A clean, post-earnings trend (either a post-earnings drift higher or a technical continuation of a sell-off) will establish itself, allowing you to trade pure direction without fighting the headwinds of inflated volatility.

While earnings season can offer great trading opportunities, much like other market moving events, it must be treated with respect. By understanding the timeline, managing expectations, and prioritising risk management over speculative greed, you can safely navigate your first corporate earnings cycle.

Ahead of the upcoming second quarter (Q2) US earnings reporting season, here are a few key releases to have on your radar:

Footnotes

¹FactSet Earnings Insight_12 June 2026

²https://finance.yahoo.com/markets/stocks/articles/oppenheimer-sends-clear-message-broadcom-153659553.html

³https://www.broadcom.com/company/news/financial-releases/64371

⁴https://www.tastylive.com/news-insights/broadcom-earnings-preview-ai-demand-guidance-and-an-8-6-expected-move

⁵https://www.stocktitan.net/news/AVGO/broadcom-inc-announces-second-quarter-fiscal-year-2026-financial-if4yrbje8hq6.html

⁶https://www.prnewswire.com/news-releases/broadcom-inc-announces-second-quarter-fiscal-year-2026-financial-results-and-quarterly-dividend-302790698.html

⁷https://www.morningstar.com/stocks/broadcom-earnings-stock-decline-is-an-overreaction-conservative-guidance

⁸https://www.tradingkey.com/analysis/stocks/us-stocks/261947304-dowjones-nasdaq-broadcom-avgo-anthropic-blackstone-quantinuum-trump-fed-tradingkey