Q3 results show US profit growth strong, but no longer accelerating
SPY•Third-quarter S&P 500 earnings growth is estimated at about 33% year over year, but Goldman Sachs strategists say growth is no longer accelerating and upward revisions have slowed. Estimates for AI infrastructure stocks show earnings growth peaking at 80% this quarter and slowing to roughly 40% in 2027.
1. Earnings growth moderates
With the third-quarter reporting period more than halfway over for S&P 500 companies, Goldman Sachs strategists say results show strong profit growth that is no longer accelerating. They estimate third-quarter growth at about 33% year over year and say the pace of upward revisions has slowed, with analysts trimming profit margin estimates for many companies alongside rising energy prices.
2. AI growth outlook
The results support the view that AI investment spending will continue to grow, while the growth rate of AI capital expenditures is peaking. Analyst estimates show earnings growth for S&P 500 AI infrastructure stocks peaking at 80% this quarter and slowing to roughly 40% in 2027; high expectations for cloud revenue growth have also created a “high bar for share prices.” LSEG data put estimated S&P 500 earnings growth at 31.6% on Friday, up from 30.6% at the start of October.
