No wonder the S&P 500 Index is marching from one record to the next: Analysts are ratcheting up earnings estimates for the current quarter at the swiftest pace in nearly four years.

A Citigroup Inc. index that tracks the relative number of US earnings-per-share estimate upgrades versus downgrades is at its highest since December 2021. And the trend is just as strong among companies that recently issued their own outlooks. A gauge of forward guidance that compares corporate forecasts with the Wall Street consensus is hovering at its second-highest level in nearly four years, Bloomberg Intelligence data show.

The brighter outlook marks a dramatic turnaround from earlier in the year, when anxiety over President Donald Trump’s trade policies reached a peak and sent that same gauge of corporate guidance to the lowest in a decade.

There is one caveat to all the rosiness, however: It may take months before Corporate America begins to feel the full hit from Trump’s trade wars on its supply chains and profit margins.

“The sheer number of ‘what ifs’ caused analysts to reduce earnings estimates months ago on tariff fears,” said Yung-Yu Ma, chief investment strategist at PNC Asset Management Group. “Now there’s more belief that this won’t be a crushing blow to the economy as once feared. But the catch is everyone is waiting to see what happens with tariffs in the coming months.”

That may help explain why the full-year outlook still hasn’t completely recovered to what it was. Analysts’ earnings estimates imply growth for all of 2025 will be 9.2%, down from nearly 13% at the start of the year. Wall Street sees companies in the S&P 500 earning around $269 per share in 2025 — below the $273 seen at the start of the year and a projection of $279 a year ago, according to data compiled by Bloomberg Intelligence.

And there’s no guarantee the upward momentum will continue. Sell-side analysts and companies could guide forecasts lower in coming months, according to Nick Giacoumakis, president of NEIRG Wealth Management.

Such a scenario played out during Trump’s first term: Though the US trade war with China heated up early in 2018, the hit to corporate profits only showed up about a year later. And Giacoumakis noted that the economy had the tailwind of big corporate tax cuts during that period.

This time around, the latest sweeping tax-cut legislation championed by Trump is also alleviating worries about the effects of his trade policies on the economy. Yet the bill may only reduce the tax burden on S&P 500 companies by about half as much as the 2017 package, according to BI.

In a note to clients on Friday, Goldman Sachs Group Inc.’s David Kostin said that he expects the strong recent trajectory of analyst earnings revisions to “weaken going forward,” adding that “the magnitude of margin expansion embedded in consensus estimates appears unrealistic.”

Of course, analysts are hesitant to revise their outlooks for the second half of the year until more companies deliver profit guidance in the coming quarters, according to Wendy Soong, senior analyst at BI.

Still, the trend from the current earnings season was unmistakably strong, though the data set is limited. Only 25% of S&P 500 companies provide quarterly guidance, a group typically dominated by technology and consumer-discretionary companies. Some 90 have reported third-quarter EPS outlooks so far and BI scores the momentum of their guidance as the strongest since the final three months of 2024. Of the 64 firms that have reported third-quarter revenue guidance, the momentum score is the highest since the second quarter of 2021.

Traders will get a close look at how American consumers are faring in the early days of Trump’s tariff regime when the biggest US retailers like Walmart Inc. and Target Corp. report earnings this week.

Corporate results in recent years have shown resilience in the face of everything from soaring inflation to the highest interest rates in decades. And now, many investors are hoping Trump will either soften or remove tariffs before they pinch profits.

Yet while US companies are displaying confidence in their ability to weather the trade storm, “cost pressures could increase” in the second half of 2025, “introducing downside risk to real revenue growth,” Goldman Sachs strategists led by Guillaume Jaisson wrote in a note to clients on Aug. 4.

“Most companies are still burning through pre-tariff inventories that had been set aside coming into this year before executives really knew what was going to happen with global trade,” NEIRG’s Giacoumakis said. “So it’ll take multiple quarters before we have a better idea how all of this is affecting companies.”