Wall Street’s forecast for S&P 500 earnings growth in 2026 has risen sharply as artificial intelligence spending strengthens profits across technology, advertising, cloud computing, data centers, and related industries. Earnings are now projected to increase 32% year over year, up from roughly 24% before second-quarter reporting began.

The revision followed a strong earnings season. About 86% of S&P 500 companies reporting results beat analyst expectations, according to Bloomberg Intelligence data highlighted by The Kobeissi Letter. LSEG also found that 86% of 492 reporting companies topped estimates, well above the long-term average beat rate of 67.5%.

The Kobeissi Letter posted on X on September 12, 2026:

The AI boom is powering historic earnings growth:

Full-year S&P 500 profit is now projected to grow +32% YoY in 2026, up from the +24% expected before the Q2 earnings season began.

This comes as 86% of S&P 500 companies beat expectations this quarter, the highest beat rate… pic.twitter.com/MR7fPqsjch — The Kobeissi Letter (@KobeissiLetter) September 12, 2026

The post is available at https://x.com/KobeissiLetter/status/2098818672043126891?ref_src=twsrc%5Etfw.

AI Infrastructure Drives Higher Earnings Forecast

Bloomberg Intelligence analyst Nathaniel Welnhofer identified the buildout of AI infrastructure as the clearest driver of the stronger 2026 earnings outlook. The gains have extended beyond chipmakers to cloud services, digital advertising, data centers, and investment income.

Communication Services recorded the largest upward revision among major sectors. Its projected 2026 earnings growth rose to 51% from 26% at the start of the second quarter. Alphabet contributed through stronger advertising and AI monetization, while other companies also delivered significant earnings surprises.

Consumer Discretionary followed, with projected growth increasing from about 12% to 32%. Amazon played a major role in that upgrade after reporting profit at roughly three times market expectations. Target, Walmart, TJX, Ross Stores, and Estée Lauder also beat estimates and raised guidance.

A Bloomberg chart showed Energy earnings projected to rise about 83% in 2026, while Information Technology profits were forecast to increase roughly 59%. The figures underscore the breadth of the revision cycle beyond the companies most directly associated with AI hardware.

The quarter also included a significant accounting effect. Reuters reported that aggregate S&P 500 second-quarter earnings were tracking about 52% above the year-earlier level. Excluding large mark-to-market gains at Alphabet and Amazon, however, earnings growth would still have reached about 33%, which would remain the strongest pace since 2021.

Amazon recorded $53.4 billion in second-quarter non-operating pre-tax income, largely linked to investments including Anthropic. Alphabet also reported substantial unrealized investment gains. Goldman Sachs estimated that AI infrastructure companies generated roughly one-third of S&P 500 earnings-per-share growth during the quarter, highlighting the extent to which AI spending has entered corporate earnings results.

Barclays Raises S&P 500 Forecast

The stronger profit outlook has also led to higher market targets. Barclays raised its 2026 S&P 500 earnings-per-share forecast to $365 from $337 and lifted its year-end index target to 7,950 from 7,800. The bank cited continued AI investment and healthy economic activity as supporting factors.

UBS, Goldman Sachs, and Citigroup have projected year-end index levels of 8,000 or higher. Those forecasts reflect stronger expected profits, although the earnings expansion continues to face identifiable risks.

Rising memory costs are pressuring technology margins, while higher interest rates and persistent inflation could limit valuation expansion. Barclays also identified the sustainability of AI spending as a key uncertainty.

The breadth of the revisions means that subsequent earnings reports and company guidance will be important for distinguishing recurring operating gains from investment-related effects. The cited indicators to monitor include the pace of AI infrastructure spending, technology margins under higher memory costs, and whether companies continue to beat estimates and raise guidance.

The data indicate that artificial intelligence is affecting more than market sentiment. It is reshaping earnings estimates, sector forecasts, and expectations for broader corporate profitability. The change represents a measurable shift from the outlook before the earnings season, as stronger reported results translated into higher profit expectations for 2026.

Source: Blockonomi