AI-related companies to drive most third-quarter US earnings gains

The US is set to experience a surge in third-quarter earnings, with artificial intelligence (AI) companies driving the majority of these gains, according to analysts. The technology sector, particularly AI heavyweights like Alphabet, Amazon.com, and Meta Platforms, is expected to contribute two-thirds of the 31% year-over-year increase in S&P 500 earnings.

Energy and materials companies are also contributing to the rally, but to a lesser extent, due to geopolitical factors. Meanwhile, earnings growth in sectors like consumer staples and real estate is lagging behind. Strategists are concerned that this AI-driven growth may be nearing its peak, as companies continue to invest heavily in AI infrastructure, leading to higher hurdle rates and increased scrutiny.