S&P 500 Earnings Forecast Nears 30% as AI Investment Faces Test

S&P 500 earnings are projected to rise 29.5% year over year in the third quarter of 2026, more than twice the expected revenue increase and placing margins, AI investment and private-market gains at the center of the market outlook.

Revenue is forecast to grow 12.3%, up from 10.9% on June 30. The earnings estimate also increased from 26.7% during the same period.

Earnings estimates rose 1.4% between June 30 and Sept. 30, while the average change over the past five years was a 2.2% decline and the average change over the past 10 years was a 2.5% decline.

Corporate guidance has strengthened the outlook. Of 116 companies issuing third-quarter earnings-per-share guidance, 72 offered positive guidance and 44 offered negative guidance. Positive guidance represented 62% of the group.

The gap between projected earnings and revenue growth makes margin expansion a central part of the forecast. S&P 500 earnings are expected to grow 32.4% for calendar 2026, followed by 27.6% growth in the fourth quarter.

The valuation measure is near its historical average. The index’s forward 12-month price-to-earnings ratio was 19.0 based on Wednesday’s close, below its five-year average of 19.8 and close to its 10-year average of 19.1.

The composition of earnings adds another test for the reporting season. Nearly half of S&P 500 earnings-per-share growth in 2026 is tied to AI investment. Large technology companies also recorded roughly $150 billion in unrealized gains on private-company investments during the second quarter of 2026, equal to 12% of S&P 500 earnings per share.

Ben Snider, chief U.S. equity strategist at Goldman Sachs Research, said, “Our base case is for S&P 500 earnings growth to decelerate, not collapse, in coming years.”

Snider also said, “Even an ‘average’ multiple may be expensive if current earnings are unsustainable.”

The third-quarter reporting season will show whether companies can sustain revenue growth and margins as the contribution from AI investment and private-market gains comes under closer scrutiny. Earlier coverage of improving S&P 500 earnings expectations examined the rise in projected third-quarter profit growth.

The boost from AI investment is expected to fade gradually as productivity gains become more important.