Consensus expects EPS growth of +27% and sales growth of +10%, while the breadth of earnings revisions for the S&P 500 remains a solid +22%, down from the peak of +28% recorded at the end of June, but still at historically elevated levels, which continues to support the idea that the market is driven by earnings growth.
However, estimates for 3Q26 have continued to be revised upwards ahead of the earnings season, something that also occurred in the last three campaigns and contrasts with the usual historical pattern, thus raising the bar for reactions following earnings releases.
Estimates for CY26 and CY27 have increased to 32% and 15%, respectively, supported by results in 1H26 that have significantly exceeded expectations and by the additional revenue contribution related to artificial intelligence (AI).
Moreover, the strength of earnings is broad as the median company in the Russell 3000 records sales growth of +8% and EPS growth of +14%.
Meanwhile, the 7 Magnificent continue to lead growth, with expected EPS growth of +37% in 3Q26, compared to +18% for the rest of the S&P 500, both solid levels in historical terms. In this context, the quality of earnings, free cash flow generation, and the breadth of revisions will continue to be key factors in differentiating winning companies during this earnings season.
