Here’s my #1 stock market indicator.

Most investors never pay attention to it.

But research shows it’s one of the most reliable data points to forecast stock prices.

I’m talking about earnings revisions.

These are the adjustments that Wall Street analysts make to their earnings per share (EPS) estimates for publicly traded companies.

When estimates move higher, Wall Street is essentially saying that the company will make more money than previously expected.

And research shows that stocks with rising earnings estimates have historically outperformed those with flat or falling estimates.

Today, I’m showing you the research behind this phenomenon, and several stocks whose estimates are moving sharply higher right now.

The Data Behind Earnings Revisions and Stock Performance

Multiple studies have confirmed the link between upward earnings revisions and strong stock performance.

Barclays Equity Research (2013) – Found that stocks with the highest upward earnings revisions outperformed those with downward revisions by an average of 5–7% annually.

Bank of America Quantitative Strategy Report (2020) – Showed that stocks in the top quintile of earnings estimate upgrades delivered significantly higher returns over the following 12 months compared to those in the bottom quintile.

Jegadeesh & Livnat (2006) – Found that earnings momentum, driven by analyst revisions, had strong predictive power for future stock price movements.

McKinsey & Co. (2016) – Suggested that consistent upward earnings revisions correlate with higher shareholder returns over time, particularly in growth sectors.

The reason for this correlation is simple: analysts raise earnings estimates when a company’s business is getting stronger – revenue is growing faster, profit margins are improving, or the company is becoming more efficient.

Investors take these revisions seriously, leading to higher demand for the stock and, consequently, higher stock prices.

Nvidia: A Prime Example of Earnings Revisions Driving Stock Growth

I’ll demonstrate this phenomenon with Nvidia and then give you a few other companies with growing earnings estimates.

Despite the recent volatility caused by the “AI will kill us all” narrative, Nvidia’s earnings estimates continue to rise.

• 90 days ago, the consensus EPS estimate for 2027 was $12.75.

• 60 days ago, the consensus EPS estimate for 2027 was $13.03.

• 30 days ago, the consensus EPS estimate for 2027 was $13.26.

• Today, the consensus EPS estimate for 2027 is $15.57.

You can view these estimates for free on the “Analysis” tab of Yahoo! Finance.

This tab is one of my most-used stock picking resources on the internet.

Yet most investors don’t know it exists.

Tracking these estimates is a great way to tune out the “noise” of the market and focus on what really matters – earnings.

Plus, it can help you estimate price targets for stocks.

For example, let’s say high-growth tech stocks typically trade around 20-20x next year’s earnings – pretty standard.

• Multiply $15.57 by 20 and you get a low-end Nvidia price target of $311.

• Multiply $15.57 by 25 and you get a high-end Nvidia price target of $389.

Today the stock is trading around $230 – meaning the stock is trading at just 14.8x next year’s earnings.

That’s cheap!

Of course, this is a simple back-of-the-napkin math shortcut.

But take it from someone that used to value companies for a living – this is the bones of how valuation actually works.

Other Companies With Recent Earnings Upgrades

Nvidia isn’t the only stock benefiting from this trend.

Several other companies have consistently seen earnings revisions higher, making them strong candidates for continued stock appreciation:

Credo (CRDO) – Credo builds the high-speed connection chips and cables that transfer massive amounts of data inside data centers. Similar to Nvidia, the headlines are focused on fear while the underlying numbers tell a very different story. Credo’s 2027 EPS estimates have steadily increased from $8.85 to $9.70 over the last 90 days.

Micron (MU) – This is another stock with strong exposure to the AI buildout whose estimates continue to rise. Micron’s 2027 EPS estimates have increased from $149.74 to $160.19 over the last 90 days.

Chevron (CVX) – Here’s a non-AI stock that’s benefiting from higher oil prices. Chevron’s 2027 EPS estimates have increased from $12.63 to $14.38 over the last 90 days.

SpaceX (SPCX) – 90 days ago, Wall Street estimated that SpaceX would earn just $0.06 per share in 2027. Now the average estimate is $1.74. This is a big part of why the stock has rebounded lately.

But there’s an important caveat: With newly public companies like SpaceX, it’s important to give both SpaceX management and Wall Street analysts time to zero in on an appropriate earnings estimate. The more management speaks and the more Wall Street learns, the more accurate these earnings estimates will get.

Take it from someone who used to value companies for a living – earnings drive stock prices, and earnings estimates give us our best look at where those earnings are headed.

You can track them for free on the “Analysis” tab of Yahoo! Finance.

It takes less than a minute to check, and it’s the #1 indicator I look at before buying a stock.