86% of S&P 500 Components Beat Earnings Expectations! AI Boom Fuels S&P 500 Profit Growth, Full-Year Growth Forecast Raised to 32%

Odaily Financial News APP noted that S&P 500 index’s full-year profit expectations are rising, thanks to the AI boom and better-than-expected earnings performance in the first half of the year.

According to BI data, almost all companies in the S&P 500 have reported earnings, with 86% beating analysts’ expectations, the highest proportion since 2021.

According to Wall Street data, as profit forecasts for consumer discretionary and telecom companies were revised upward, the benchmark index's projected earnings growth rate for this year has reached 32%, up from 24% before the second-quarter earnings season.

BI analyst Nathaniel Verhoef said: “Massive AI infrastructure buildout is a clear catalyst for the strong earnings growth we see in 2026.” He added that the increase in the second quarter even outpaced the first quarter, “which itself was already record-breaking.”

S&P 500 Earnings Growth Forecast for 2026

The performance in the second quarter stood out particularly as analysts had previously questioned whether companies could continue to meet the market’s lofty expectations after a strong start to the year.

The greatest earnings beats concentrated among AI-related companies, such as Amazon and Alphabet.

The telecom services sector experienced the largest upward revision, now expected to post 51% earnings growth this year, up from the 26% anticipated at the start of the second quarter.

Within the industry, EchoStar Corp., Alphabet, and Warner Bros. Discovery had the largest forecast increases in the past three months. Index heavyweight Alphabet benefited from robust advertising revenue growth and AI-driven monetization; while EchoStar reported the largest beat, mainly driven by one-off events.

BI analyst Rahul Jain stated that even after excluding the “extraordinarily large” one-time earnings contributions from the broader S&P 500, it remains one of the strongest earnings seasons ever seen.

Following the second-quarter results, consumer discretionary was the third most-upgraded sector. Excluding autos, all sub-sectors exceeded expectations, with Amazon’s performance in particular beating forecasts by a factor of three. The sector’s earnings are now expected to grow 32% this year, up from an earlier estimate of around 12%.

BI analyst Wendy Song added: “Retailers including Target, Walmart, TJX, Ross Stores, and Estée Lauder all reported EPS above estimates and raised guidance, buoyed by healthy consumer spending.”

Technology

The technology sector continues to benefit from increased capital expenditures aimed at boosting AI capabilities, although some headwinds are emerging.

Verhoef noted: “AI companies remain the main driver of S&P 500 earnings.” He added that although the group may have peaked for the quarter and margin expansion is slowing, raising the bar for monetization, the underlying strength remains intact.

Rising costs are becoming a drag. Apple’s sales outlook was disappointing, as memory price increases and supply constraints extended product wait times; Nvidia warned that surging memory costs would narrow margins. Nvidia, Apple, and Microsoft are the largest weighted constituents of the index.

Energy

Driven by the market’s demand for reliable electricity and less-than-expected disruptions from Middle East conflicts, energy companies’ earnings are on the rise.

ExxonMobil and Chevron’s earning estimates were revised upward. Chevron posted record profits, while higher crude oil prices due to the Iran conflict increased ExxonMobil’s profit by about $3.7 billion.

Baker Hughes was the biggest surprise among energy equipment and service companies, as Middle East war impacts proved milder than expected and order volumes rose. With industrial and energy technology orders more than doubling year-on-year to a record $7.1 billion, the company raised its full-year outlook.

Financials

As catalysts are expected to persist into the third quarter, financial companies' second-quarter earnings estimates were slightly upgraded.

Keefe Bruyette & Woods analyst Shreyank Gandhi said: “Robust capital markets, strengthening loan growth, and clean credit profiles together supported Q2 2026 performance.”

According to BI’s aggregated data, revenues from fixed income, equities, foreign exchange, and commodities trading, plus trading fees, are expected to rise in the third quarter. BI analyst Neil Seibert noted that credit trading is supported by active bond and securitized product transactions, and advisory fees are forecast to grow from larger-scale deals.

Seibert said equity trading revenues might ease from the “exceptional” second quarter, but this moderate pullback reflects typical seasonality rather than a broader slowdown in business activity.

BI analyst Eric Bader said mid-sized banks’ earnings growth next year is expected to outpace that of large regional banks, adding that the group is less sensitive to deposit cost pressures.