S&P 500 Q2 earnings likely to top 29% as season kicks off

The S&P 500 is on track to report Q2 2026 earnings growth above 29%, FactSet estimates, well above the current 23.6% consensus as companies historically beat forecasts during reporting season. As a MarketWatch analysis notes, that profit surge could help lift the index toward strategists' targets even as investors weigh AI spending and geopolitical risks.

Key Takeaways

• FactSet projects final Q2 earnings growth above 29%, the highest since Q4 2021, using historical beat patterns.
• Analysts expect 23.6% growth entering the season; early reporters through July 10 already beat estimates by 14.5%.
• Evercore ISI sees profit growth overcoming AI concerns, targeting S&P 500 at 7,750 by year-end.
• Yardeni Research still expects 8,250 by December, though warns lofty expectations leave little room for disappointment.
• Evercore flags Nvidia, Alphabet, Netflix and other large, underloved names as earnings-season picks.

Why is S&P 500 Q2 earnings growth expected above 29%?

FactSet's John Butters notes the index enters Q2 2026 with a 23.6% estimated year-over-year earnings growth rate, already up from 18.8% on March 31. That would mark a second straight quarter above 20% and a seventh consecutive quarter of double-digit growth.

The key twist is the earnings surprise effect. Over the past decade, actual S&P 500 earnings have beaten estimates by 7.4% on average, lifting the final growth rate by 6.2 percentage points from quarter-end through reporting season. Applying the most conservative historical average to June 30's 23.2% estimate yields 29.4% actual growth.

Recent quarters have been even stronger. Over the past four quarters, 80% of companies beat EPS estimates by 9.2% on average, adding 8.5 percentage points to the growth rate. Of 18 early reporters through July 10, 89% topped estimates and aggregate earnings exceeded forecasts by 14.5%.

What do Wall Street strategists expect from earnings season?

Second-quarter reporting unofficially begins Tuesday as JPMorgan, Citigroup, Goldman Sachs and Bank of America release results, MarketWatch reports. Evercore ISI strategist Julian Emanuel argues record AI investments will keep supporting above-trend EPS growth, with colleague Stan Shipley expecting companies to beat forecasts by 7%, more than double the pre-pandemic rate.

Ed Yardeni at Yardeni Research sees earnings continuing to drive the market higher, maintaining an 8,250 year-end S&P 500 target. Yet he cautions that expectations are so elevated that merely matching forecasts, rather than beating them, could trigger volatility in July and early August, as happened in June.

For investors tracking how corporate profits shape household wealth, our Net Worth & Wealth coverage follows these macro shifts closely. The forward 12-month P/E ratio sits at 20.5, above both five- and 10-year averages, according to FactSet.

Which stocks could benefit as Q2 results roll in?

Evercore ISI screened Russell 1000 companies that underperformed their sectors year-to-date while carrying elevated short interest. The firm further required above-sector 2027 earnings estimate revisions and a track record of at least seven double beats over the past eight quarters.

Prominent names passing that screen include Nvidia, Alphabet, Netflix, Intuitive Surgical, Booking Holdings, Stryker, Automatic Data Processing, Moody's, Cintas, Regeneron Pharmaceuticals, Nasdaq and Axon Enterprises. Evercore calls them among the biggest and least loved stocks of 2026.

Tech sentiment mirrors the caution seen before Q1 results catalyzed a rally, with multiyear-high short interest in the Invesco QQQ Trust and Nasdaq-100 valuations near their lowest relative to the S&P 500 since 2018. Positive surprises from these names could reset the narrative quickly.

How high could the S&P 500 climb if earnings deliver?

Evercore raised its 2026 S&P 500 EPS target to $330 from $310, still below the $340.70 consensus, and maintains a 7,750 year-end price target. Yardeni argues that if 2027 EPS reaches $412.50 with a 20.0 forward P/E, the index hits 8,250.

Both strategists expect dip buyers to limit downside if results merely meet expectations. The S&P 500 has traded around 7,500 since mid-May, and with Energy and Information Technology leading Q2 growth while Health Care lags, breadth may broaden beyond the AI trade.