Beyond the AI Hype: Where Earnings Revisions Point Ahead of Q3 Reports
As we head into Q3 earnings season, investors are once again focused on which companies can deliver the kind of earnings growth that drives sustained stock-market outperformance.
This is a theme I have followed for decades. From the mid-1990s through 2010, I worked alongside Bill O'Neil advising top money managers. One of the most important lessons from that experience was that accelerating earnings growth is a critical driver of the market's biggest winners.
Today, I use that same fundamental lens when evaluating potential leaders. One of the most useful clues is the direction of analysts' earnings estimates. When estimates are being revised higher before a company reports, it can signal that expectations are catching up with improving business conditions.
Heading into Q3 earnings, those revisions are becoming increasingly concentrated.
Five Stocks Drawing Attention
Recent FactSet data highlighted five S&P 500 companies receiving some of the largest upward revisions to earnings estimates: Dell Technologies (DELL), Micron Technology (MU), CrowdStrike (CRWD), Marathon Petroleum (MPC), and Valero Energy (VLO).
What's particularly interesting is that these aren't simply beaten-down stocks experiencing a relief rally. In several cases, estimates are being raised because underlying business conditions remain unusually strong.
Micron Technology (MU)
Subscribers to my MEM Edge Report will be familiar with Micron, as we’ve had it on our Long Term Buy and Hold List since 2025. The stock is perhaps the clearest example of the earnings-growth theme playing out within the semiconductor industry.
Analysts have been raising estimates ahead of the company's September 30 fiscal Q4 report, with the revisions tied to strong DRAM pricing, tight memory supply, and continued demand from cloud providers. The uploaded research cites a 307% year-over-year increase in cloud-related memory growth and an estimated quarterly EPS figure of $31.43.
The important point isn't simply that Micron's earnings are growing. It's that expectations continue to move higher as demand remains strong.
That distinction matters. A company beating a depressed estimate is one thing. A company consistently forcing analysts to raise already-high expectations is something else entirely.
CrowdStrike (CRWD)
CrowdStrike has been another big winner for our MEM Edge Report subscribers, and the company provides a different example of earnings momentum.
Over the past 90 days, 19 analysts reportedly raised their EPS projections following the company's earnings beat and improved outlook. The company also raised its full-year revenue guidance to approximately $6 billion.
Unlike the memory stocks, CrowdStrike's story isn't about a supply shortage. It's about continued enterprise demand and the ability of a leading cybersecurity platform to scale. For growth investors, that's an important distinction: earnings revisions can identify strength across different industries, not just within the AI hardware complex.
Dell Technologies (DELL)
Dell represents another side of the AI infrastructure buildout.
The company's earnings revisions have been supported by strong demand for AI-optimized servers and a substantial backlog of GPU-dense infrastructure. And this is where the earnings-growth framework becomes particularly useful. Rather than simply asking whether AI-related stocks have already moved too far, investors can ask a more important question: Are earnings estimates continuing to rise fast enough to justify the stock’s strength?
When earnings expectations accelerate alongside demand, a stock can remain fundamentally supported even after a substantial price advance.
Marathon Petroleum (MPC) and Valero Energy (VLO)
The other two names on the list are Marathon Petroleum and Valero Energy, and they offer an interesting contrast. Their earnings revisions are being driven by strong refining operations and favorable product realizations rather than AI-related growth.That tells us something important about the current market, namely that earnings strength is not confined to technology.
At the same time, investors need to recognize the cyclical nature of refining. The research notes point to analysts raising questions about how long current refining margins can remain elevated.
The Bigger Picture: Follow the Revisions
This is where I believe the O'Neil approach remains particularly relevant.
The objective isn't to find companies simply because their earnings are growing. It's to identify companies where earnings growth, expectations, and price action are moving in the same direction.
Micron's memory pricing, Dell's AI server backlog, and CrowdStrike's enterprise growth represent different businesses, but analysts are being forced to raise their expectations for all three. That's the signal I would pay attention to as Q3 earnings approach.
While you may be familiar with the concept that strong earnings are one of the key attributes of a winning stock, there are several other significant attributes. If you’d like to uncover these powerful signals of a stock poised to outperform, use this link here to learn about my just-released course: The Art Of Spotting Winning Stocks.
After decades of studying and applying Bill O'Neil's approach with professionals and self-directed investors, I have put his teachings into a 5-part course that provides you with a system that will help you uncover winning stocks!
Warmly,
Mary Ellen McGonagle
MEM Investment Research
