The S&P 500’s earnings surge looks incredible. Two companies explain why

Wall Street's primary focus is the earnings performance of major U.S. publicly traded companies, serving as a pulse check for both the market and the broader economy. As of Monday, the S&P 500's blended earnings growth rate for Q2 2026 is an impressive 51%, according to an analysis by John Butters, VP and senior earnings analyst at FactSet.

If this growth rate holds, it would mark the index's highest earnings growth since Q2 2021, when it reached 91.6%. However, two companies—Alphabet and Amazon—are primarily responsible for this surge since June 30. Both companies reported actual GAAP earnings per share that exceeded analyst estimates, with Alphabet's EPS of $9.11 compared to an estimate of $2.88, and Amazon's EPS of $5.75 compared to an estimate of $1.82.

These companies' strong results, largely driven by unrealized gains on investments recognized as other income, account for the majority of the earnings growth rate. When Alphabet and Amazon are excluded, the S&P 500's blended earnings growth rate drops to 32.6%, which is still the highest since Q3 2021, when it reached 40.6%. This growth rate also marks the seventh consecutive quarter of double-digit earnings growth for the index, a streak that predates the current AI infrastructure boom.

The strength is not limited to these two tech giants, as 10 out of 11 sectors are reporting year-over-year earnings growth, with nine of those sectors reporting double-digit growth. Energy is leading the charge, with a 146.3% year-over-year increase, largely driven by higher fuel prices. Communication Services earnings are up 116.9% year-over-year, mainly due to mark-to-market gains from AI infrastructure investments.

Healthcare is the only sector with a year-over-year profit decline of around 6.5%. Executives' discussions on Q2 earnings calls have highlighted key themes. The term "tariff refund" was mentioned only 35 times among S&P 500 companies' earnings calls, while "AI" appeared in 305 calls, and "inflation" on 193 calls. Similarly, "tariff" was mentioned 162 times this quarter.