Investors wary of slowdown in US corporate profit boom
SPY•S&P 500 earnings are expected to rise more than 35% in 2026, then slow to 15% growth in 2027. Investors are watching AI spending and other headwinds as the index’s forward P/E ratio has fallen to 19.2 from 22 at the start of the year.
1. Profit growth outlook
S&P 500 earnings are on track to grow more than 35% in 2026, the highest rate since 2021, while analysts expect growth to slow to 15% in 2027. Investors are questioning whether companies can sustain the gains, as comparisons become more difficult and AI capital spending growth moderates.
2. AI spending in focus
Five AI hyperscalers are expected to spend just over $800 billion this year and $1.1 trillion next year, Goldman Sachs estimates. The projected increase in spending slows from nearly 100% this year to 37% next year. Investors are also monitoring whether AI spenders can generate sufficient returns and whether regulatory or community opposition could slow data-center construction.
3. Valuations and risks
The S&P 500 has risen about 12% this year, while its forward P/E ratio has declined to 19.2 from 22 at the start of the year. All 11 S&P 500 sectors are expected to increase earnings in 2026, but investors cited higher oil prices, interest rates and a possible consumer slowdown as risks to company results.
