AI-related companies to drive most third-quarter US earnings gains
SPY•Analysts expect S&P 500 earnings to rise about 31% year over year in the third quarter, with two-thirds of the increase coming from technology and AI-heavyweights Alphabet, Amazon and Meta.
1. AI drives earnings forecast
Analysts expect S&P 500 earnings to rise about 31% year over year in the third quarter. LSEG’s Tajinder Dhillon said two-thirds of the projected increase is expected to come from technology and AI-heavyweights Alphabet, Amazon and Meta.
2. Sector growth varies
Energy earnings are expected to rise about 115%, while consumer staples and real estate are among the sectors with the weakest growth estimates. Semiconductor company earnings are expected to increase about 136%, compared with about 158% in the second quarter.
3. Growth faces scrutiny
S&P 500 earnings grew nearly 54% in the second quarter, the strongest growth since 2021; excluding mark-to-market gains at Alphabet and Amazon on AI-related investments, growth was about 35%. Strategists raised concerns about peak earnings growth, cooling earnings estimate revisions and the effect of higher interest rates on corporate profits.
