Full-year 2026 earnings growth projections for the S&P 500 have risen to 32%, increasing from 24% prior to the second-quarter results. This trend is driven by significant AI-related spending, which is boosting profits across various sectors.
The revision, reported on September 9, follows a second-quarter reporting season where 86% of S&P 500 companies exceeded analyst expectations. This represents the highest beat rate since 2021.
A major driver is the capital expenditure boom among hyperscalers like Amazon and Microsoft. Forecasts for 2026 capital expenditures among major hyperscalers are expected to exceed $754 billion.
Specific sector growth is notable: communication services are projected to grow by 51%, while consumer discretionary is tracking at 32% growth. Quarterly profit expansions have consistently stayed above 20% this year.
In response, major financial institutions have updated their price targets for the S&P 500. Goldman Sachs and JPMorgan have raised their targets to 8,000, while HSBC has set its target at 8,100.
