The year is progressing with clear support for the stock markets due to corporate results
Beyond bubbles and stock market overheating, company share prices tend to reflect their earnings . If earnings rise, the stock market value of companies usually does as well, at least in the long run.
It’s been a good season for publishing corporate results , although the results have been mixed.
74% of US companies and nearly half of European companies have released their results for the last quarter of 2025 , which, on average, exceeded expectations. Reports will continue to be published this week, but the overall picture is not expected to change significantly.
In the United States, profits have grown 15% year-on-year , while in Europe growth has been 5%. Within the S&P 500, the strongest profit growth was recorded in the materials and information technology sectors, while in the Stoxx 600, the best-performing sector was, once again, financials, followed by consumer discretionary, which had been hit hard in previous quarters.
Stock markets have seen particularly strong performance in the industrial sector. The MSCI World Industrials index has delivered a total return of over 10% year-to-date, compared to a slightly negative S&P 500 and just over 3% for the Stoxx 600 over the same period. The sector’s strength has been driven by growth in companies linked to defense and artificial intelligence infrastructure. Increased geopolitical tensions have boosted defense budgets, while the expansion of artificial intelligence has accelerated demand for power systems and cooling solutions in data centers, particularly in the United States.
Software companies continue their stock market decline
The new AI model unveiled Thursday by US company Anthropic boosted confidence in AI capabilities and put further pressure on software stocks. The model is particularly effective at office tasks and programming , raising questions about the future need for services provided by traditional software companies as AI tools become increasingly sophisticated. While the sell-off in software companies reflects strong market confidence in AI, shares of major cloud service providers have also declined despite their robust profits.
Meanwhile, the rotation continues.
Sector rotation is intensifying, leaving the Nasdaq behind: for all intents and purposes, the S&P 500 is stabilizing near its highs . The Nasdaq 100 is currently lower than it was at the beginning of October. However, the Dow and the Russell 2000 have clearly been the best-performing indices, and European stock markets are significantly outperforming their American counterparts. Asian stocks remain an even more attractive proposition, with strong buying pressure on the chip sector.
The real alternative
In a world where complexity is marketed as sophistication and scalability is often seen as a strength, I believe that simplicity and discipline in investment management have real and lasting value.
Specifically, we are now seeing the economic cycle extend, employment holding steady, and inflation moderating . Therefore, I believe that a greater number of companies and sectors will continue to participate in the upward trend, which should support the stock markets.
When trends are not followed and attempts are made to please the majority, decisions can be made that others cannot or will not make, thus benefiting the greater good in wealth management: risk-adjusted returns for each investor .