Business 3 min read By Arthur Ellington
S&P 500 earnings surge driven by Alphabet and Amazon gains
S&P 500 Q2 earnings growth hit 51%, but Alphabet and Amazon account for most of the jump. Excluding them, growth falls to 32.6%, still the highest since Q3 2021.
The S&P 500's second-quarter earnings growth is running at 51%, a figure that would mark the index's strongest performance since 2021. Yet the headline number flatters the broader market: two companies, Alphabet and Amazon, are responsible for most of the surge.
According to analysis from FactSet shared with CFO Daily, both tech giants reported GAAP earnings per share that far exceeded analyst estimates, boosted significantly by unrealized gains on investments recognised as other income. Alphabet posted earnings per share of $9.11 against an estimate of $2.88, while Amazon reported $5.75 versus a forecast of $1.82.
Strip out those two companies and the blended earnings growth rate for the S&P 500 falls to 32.6% from 51%. Even so, that lower figure would still represent the highest earnings growth since the third quarter of 2021, when the index recorded 40.6% growth. It would also mark the seventh consecutive quarter of double-digit earnings growth, a streak that predates the current artificial intelligence infrastructure buildout.
The strength is not confined to a couple of technology giants. Ten of the 11 sectors in the index are reporting year-over-year earnings growth, with nine of those sectors posting double-digit increases. Energy is surging 146.3% year-over-year, supported by firm fuel prices. Communication Services earnings are up 116.9%, largely amplified by mark-to-market gains from AI infrastructure investments. Health care is the lone detractor, reporting a profit decline of around 6.5%.
The earnings season also offers a window into what executives are prioritising in their discussions with investors. The term “tariff refund” has been cited on only 35 earnings calls among S&P 500 companies for the second quarter. By comparison, “AI” has been mentioned on 305 calls, while “inflation” has appeared on 193 calls. The broader term “tariff” has been cited on 162 calls so far.
The concentration of earnings growth in a small number of companies raises questions about the durability of the current cycle. While the overall index performance looks robust, the reliance on investment gains rather than operational performance at two of the largest constituents suggests the underlying picture may be more moderate than the top-line number implies. The fact that growth remains strong even without those two companies, however, points to a broader corporate earnings recovery that extends well beyond the technology sector.
