S&p 500 Earnings Recap: Techs Profits Are Big, But The Ai Spends Bigger

Nvidia stands to gain the most from that spending spree, but with expectations sky-high and competition heating up, simply beating forecasts might no longer be enough. Profits are rising even faster than sales, with earnings up 13.2% and margins at their highest level since at least 2009. Tech and communication services have been doing the heavy lifting – but analysts expect that momentum Everestex trading platform to cool this year. The resulting conversations in academia, the economic policy community, and the broader public are important to sharpening our collective thinking. Moreover, the discrepancy between the macro-model-based earnings forecasts and analysts’ forecasts has predictive power for 3-month-ahead stock returns. This study scrutinizes the quality of “bottom-up” forecasts of near-term S&P 500 Composite earnings, derived by aggregating analysts’ forecasts for individual firm-level earnings.

Corporate Reports In Brief

While still early in the Q1 reporting cycle, only 57.9% of the 19 companies that have reported so far have exceeded analyst expectations—well below the four-quarter average of 77%. Health Care and Information Technology are driving the bulk of earnings growth–excluding these sectors, growth would fall to just 0.1%. Using the April 4th publication of the S&P 500 Earnings Scorecard, Q1 earnings growth is forecasted at 7.8%– the slowest pace in five quarters. Retail earnings growth cools, but DG, WMT, HD and DLTR stand out with positive Earnings ESPs ahead of holiday-quarter results.

Zacks Mobile App

While “tariff” mentions on earnings calls fell this quarter, according to data from FactSet, 79% of consumer staples calls still made mention, the highest of all sectors. Other standouts in the third quarter earnings season included financials (23% EPS growth and 90% of companies beating EPS forecasts), where ytd returns also have been driven by earnings (see chart above). Of the four S&P 500 sectors that have driven performance year-to-date (utilities, communication services, IT and industrials), all but one notched Q3 earnings growth above the Mag 7. Since December 31, positive revenue surprises reported by companies in the Information Technology and Industrials sectors have been the largest contributors to the increase in the overall revenue growth rate for the index over this period. The S&P 500 is now reporting double-digit (year-over-year) earnings growth for the 5th straight quarter.

Exhibit 8: The S&p 500 Yield Gap, A Proxy For The Equity Risk Premium, Has Increased Ytd

Will sticky inflation remain a prevailing theme next year? And with that, we begin to start to see a turn again towards labor market tightening, which basically shifts from what has been some softening we’ve seen in the U.S. and other countries this year. And it’s also being emphasized by the fact that as job growth recovers here, we continue to see weak labor supply dynamics, immigration policies, having shifted materially across most advanced economies. The second thing we would look for is less synchronized, but still overall sticky inflation in that environment.

Earnings Recap: Tech’s Profits Are Big, But The Spending’s Bigger

• Finally, in agriculture markets, implied volatility has ticked up over recent weeks.
• Eight of the eleven sectors are reporting year-over-year growth, led by the Information Technology, Industrials, and Communication Services sectors.
• This worked, and we now expect that into next year, there will be more positive performance of the region with earnings finally delivering on the upside.
• Shares sank 8% Wednesday following the cybersecurity company’s fiscal second-quarter results, which topped Wall Street estimates.
• Get unique value-add analytics and predictive financial modeling, dedicated to making investment research smarter with LSEG StarMine data.

That wraps up our 2026 outlook episode, here on Making Sense. Keep an eye on both the upside and the downside, and be ready to pivot as the data and the headline evolves. The biggest near-term risk is a genuine macro slowdown.

That’s because forward earnings always converges toward the following year’s estimate as the current year progresses, and the 2026 estimate is higher (chart). We did so because Trump’s Reign of Tariffs imposed a 25% permanent tariff on imported autos and auto parts last week (effective April 3), the same rate as on imported steel and aluminum (effective March 12).

Zacks #1 Rank Top Movers For 02/19/26

Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Since 1988 it has more than doubled the S&P 500 with an average gain of +23.86% per year. This page has not been authorized, sponsored, or otherwise approved or endorsed by the companies represented herein. It’s made up of the top 5% of stocks with the most potential. Once you do, you’ll be notified of major events affecting your stocks and/or funds with daily email alerts.

While GDP growth has been resilient through 2025, imbalances have formed as demand has rotated toward tech capex and job gains have stalled. The global expansion is at an important juncture. Sign up for the weekly In Context newsletter, bringing market views and industry news straight to your inbox. Elsewhere, LatAm could experience strong upside thanks to outsized monetary policy stimulus and key political shifts.

Our New S&p 500 Earnings & Price Targets Under Trump’s Reign Of Tariffs

• At the same time, the tailwinds of 2025 — such as healthy balance sheets for corporates and households, ample liquidity and the broadening of AI capex spending — will likely persist in 2026, driving earnings expansion.
• Businesses will likely focus on unlocking excess cash, which could in turn fuel capital investment, wage growth and shareholder returns.
• In terms of revenues, the estimated (year-over-year) revenue growth rate for CY 2026 is 7.2%, which is above the trailing 10-year average (annual) revenue growth rate of 5.3% (2015 – 2024).
• Before deciding to trade Forex or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite.
• "This proposed transaction would provide each company with enhanced strategic flexibility, its own defined business focus and clear characteristics for investors."

If the company were excluded, the blended earnings growth rate for the category would fall from 30.7% to 23.7%. In terms of revenues, the estimated (year-over-year) revenue growth rate for CY 2026 is 7.2%, which is above the trailing 10-year average (annual) revenue growth rate of 5.3% (2015 – 2024). If 15.0% is the final number for the year, it will mark the 6th consecutive year of earnings growth and 3rd consecutive year of double-digit growth. Software & Services is in a bear market as markets price in the risk of AI-driven … The PS% can be a valuable tool for investors looking to anticipate earnings surprises and avoid being caught off guard by unexpected misses or beats. Notably, Mag-7 earnings (+18.3%) are expected to outpace S&P 500 earnings by smallest margin since 2023 Q1.

• We see greater upside in ICE no. two cotton and ICE no. 11 sugar, but we retain the more bearish outlook on soybeans.
• Fiscal and monetary easing combined with less policy uncertainty in the U.S. are going to boost business sentiment and help closing the gap between strong growth and a still soft labor market.
• We found savers can take on modestly more risk later in their careers.
• If we think about growth first, actually our economist forecasts are pretty similar to this year, so a view of continuity.

Investor Services

So as you remember, the first time we advised our clients to buy gold was in November 2022. So, as a result, global inventories will be building. After the election, uh, midterm election win in Argentina, we’re talking about global shale.

• And I think it’s only the Fed and BOE are expected to ease a little more.
• Risks to this outlook include worryingly high inflation in the U.S., which would cause the Fed to stay on hold.
• And with that, we begin to start to see a turn again towards labor market tightening, which basically shifts from what has been some softening we’ve seen in the U.S. and other countries this year.
• And given we are at the end of these rate cutting cycles in EM, they can’t be as much of a counterbalance to that.
• Now, so far this earnings season, fewer companies have delivered positive surprises – and generally the size of those surprises has been nothing to write home about.