- Intel beat Q4 revenue and non-GAAP EPS expectations, but its Q1 guidance (revenue below consensus and EPS at $0.00) drove the stock lower.
- Q4 S&P 500 earnings growth remains heavily concentrated in the Magnificent Seven, projected at ~20–21% YoY versus low single-digit growth for the rest of the index.
- Johnson & Johnson guided FY 2026 sales and adjusted EPS above Wall Street estimates, led by strength in oncology, immunology, and medical devices.
- Investor focus is shifting from trailing beats to forward guidance risk amid AI-driven demand, semiconductor supply constraints, and widening sector performance gaps.
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Intel’s Q4 2025 results underscore the tension between delivering strong historical performance and managing forward expectations. The company beat expectations in its final quarter—both revenue easing the YoY decline and EPS topping low bar estimates—but investors reacted negatively to its Q1 2026 guidance, which pointed to flat EPS and revenue midpoint (~US$12.2 B) below Street consensus. The mismatch highlights fragility in demand vs. supply constraints, especially in memory and wafer supply, and underscores how forward guidance transparency has become more important than trailing results in a high-valuation technology environment.
Complementing that, the Magnificent Seven tech stocks continue to dominate earnings growth for the S&P 500. According to FactSet, these companies are projected to grow earnings roughly 20-21 % year-over-year in Q4, while the remaining 493 companies are expected to grow by 4-10 %. The scale of this divergence amplifies both upside for those positioned in big tech (particularly AI beneficiaries), and downside for broader exposure to sectors under-earning vs. high expectations.
In contrast, companies like Johnson & Johnson are sending a message that traditional, diversified healthcare/pharma/MedTech businesses can still outperform expectations when guided carefully. J&J’s FY 2026 operational sales forecast (~US$99.5-100.5 B) and EPS guidance (~US$11.43-11.63) exceed analyst consensus, reflecting strength in oncology, immunology, and medical devices, offsetting headwinds such as patent losses and pricing pressure.
Strategically, investors should prepare for increasing volatility driven by guidance risk, sector rotation (away from stale winners toward companies with visible margin tailwinds), and supply chain limitations in semis. Key open questions remain: will Intel’s supply improve enough to close guidance gaps; can Magnificent Seven maintain >20 % earnings growth in 2026; and how will regulatory/policy risks (tariff, drug pricing, IP) affect companies like J&J and tech names. Risk management around valuation multiples, forward guidance, and margin compression is likely to dominate portfolio allocation decisions as Q1 earnings roll out.
Supporting Notes
- Intel’s Q4 revenue was US$13.67 B, down ~4 % YoY but above expectations of US$13.4 B; non-GAAP EPS was US$0.15 vs consensus of US$0.08.
- Intel’s guidance for Q1 2026 projects revenue of US$11.7-12.7 B (midpoint US$12.2 B) and EPS at US$0.00, missing analyst estimates (~US$0.08 for EPS) and revenue expectations.
- FactSet estimates that the Magnificent Seven are expected to post ~20-21 % YoY aggregate earnings growth in Q4, while the other 493 S&P 500 companies are forecasted at lower single-digit growth (~4-10 %).
- J&J projects full-year 2026 operational sales of US$99.5-US$100.5 B (≈5.9-6.7 % growth) and adjusted EPS US$11.43-11.63, both above analyst consensus (~US$98.9 B sales).
- Key strength in J&J’s portfolio came from oncology (Darzalex, Carvykti), immunology (Tremfya, Simponi), with offsetting pressure from Stelara patent expirations and device-tariff exposure.
- Intel’s supply constraints, particularly wafer availability and yield issues, are cited as major drivers of cautious Q1 guidance.