Wall Street rebounds as Q2 earnings season significantly exceeds investors expectations

The Q2 2026 earnings season is significantly outperforming Wall Street expectations, highlighting the exceptional strength of U.S. corporations. Most companies are not only beating analysts' forecasts but are also prompting upward revisions to earnings estimates for the entire S&P 500. If the current trend continues through the remainder of the reporting season, FactSet data suggest that U.S. companies could deliver their strongest earnings growth since the end of 2021.

• 86% of S&P 500 companies have reported earnings per share (EPS) above analysts' expectations, while 77% have exceeded revenue forecasts.

• The blended earnings growth rate for the S&P 500 in Q2 2026 currently stands at 47.4% year-over-year, which would mark the strongest earnings growth since Q4 2021 (91.6%).
• As recently as June 30, the market expected earnings growth of just 23.2% year-over-year, meaning estimates have nearly doubled during the earnings season.
• Nine of the eleven S&P 500 sectors have seen upward earnings revisions, driven by stronger-than-expected results and positive EPS estimate revisions.
• Looking ahead to Q3, 34 S&P 500 companies have issued positive EPS guidance, while only 20 companies have released negative guidance.
• The S&P 500 currently trades at a forward 12-month P/E ratio of 19.6, below its 5-year average of 19.9 but slightly above its 10-year average of 19.0.

US500 (D1 interval)

Looking at the US500, the index recently found support near the 7,300-point level and has resumed its upward trend, breaking decisively above 7,600 points. The rally has now extended into a third consecutive session, leaving the index approximately 80 points below its all-time high.

Source: xStation5

Amazon and Alphabet account for a large share of S&P 500 earnings growth

One of the key conclusions from this earnings season is the outsized influence of the largest technology companies on overall S&P 500 earnings growth. While earnings have improved across most sectors of the economy, Amazon and Alphabet alone account for a substantial portion of the increase in aggregate earnings expectations. This underscores how the performance of just a handful of mega-cap companies continues to shape the broader picture of U.S. corporate profitability.

• Over the past week, the projected Q2 earnings growth rate for the S&P 500 increased from 38.0% to 47.4% year-over-year.
• Amazon was the single largest contributor to this upward revision after reporting GAAP EPS of $55.75, far above the consensus estimate of $1.82.
• According to FactSet, Amazon alone accounted for approximately 76% of the increase in projected S&P 500 earnings growth over the past week.
• This exceptional result was largely driven by a one-time pre-tax gain of $53.4 billion, primarily related to its investment in Anthropic.
• FactSet nevertheless included this result because the vast majority of analysts also based their forecasts on GAAP EPS, ensuring consistency with the consensus estimates.
• Alphabet remains the largest contributor to S&P 500 earnings growth in Q2, while Amazon moved into second place following its earnings release.
• Excluding Alphabet and Amazon, the projected earnings growth rate for the S&P 500 would fall from 47.4% to 28.8% year-over-year.
• Even without these two companies, the index would still be on track for its second consecutive quarter of earnings growth above 20% and its seventh straight quarter of double-digit earnings growth.

Companies with greater international exposure are delivering stronger earnings growth

Despite the continued strength of the U.S. dollar, companies generating most of their revenue outside the United States are reporting substantially stronger earnings and revenue growth than businesses focused primarily on the domestic market. FactSet data suggest that global exposure has not weighed on corporate performance but has instead become one of the key drivers of this earnings season.

• Companies generating more than 50% of their revenue outside the U.S. are reporting earnings growth of 74.7% year-over-year, compared with 35.5% for companies generating most of their sales domestically.
• The same pattern is evident in revenue growth, with internationally exposed companies posting 20.5% growth versus 12.0% for domestically focused businesses.
• The overall blended earnings growth rate for the S&P 500 in Q2 2026 currently stands at 47.4% year-over-year.
• Alphabet, Exxon Mobil, and Chevron are the three largest contributors to the strong earnings performance of internationally exposed companies.
• Excluding these three companies, projected earnings growth for internationally exposed firms would decline from 74.7% to 27.5%, while revenue growth would fall from 20.5% to 16.0%.
• The data indicate that this earnings season continues to be driven to a significant extent by the largest global corporations with substantial operations outside the United States.

Source: FactSet