S&P 500 Earnings Growth Concentrates as AI Spending Faces Test

The S&P 500 is entering the third-quarter earnings season with strong profit-growth expectations, but concentrated gains, rising costs and heavy artificial intelligence spending are making results harder to sustain. The index’s earnings are expected to rise 27% from a year earlier. About 85% of companies reporting early results exceeded earnings expectations, compared with a historical average of 71%. Yet positive surprises are producing smaller market gains. Companies that beat both earnings and revenue estimates outperformed the S&P 500 by only 0.7 percentage point the following day, compared with a historical average of 1.4 percentage points.

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