U.S. corporate earnings are expected to increase substantially in the third quarter of 2026, with technology companies and businesses linked to artificial intelligence accounting for most of the projected growth, according to estimates compiled by LSEG.
Analysts forecast that earnings among S&P 500 companies will rise approximately 31% year over year, with the technology sector and AI-related companies, including Alphabet (NASDAQ:GOOG), Amazon.com (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META), contributing around two-thirds of the increase.
Tajinder Dhillon, LSEG’s head of earnings and equity research, said the concentration of earnings growth among these companies reflects the continued influence of AI-related investment on corporate profitability.
Technology stocks have also contributed to recent gains in U.S. equities, helping the S&P 500 reach a record high this week ahead of the quarterly reporting season.
The earnings season is expected to begin unofficially next week with results from major financial institutions, including JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS).
Technology and Energy Expected to Account for Most Earnings Growth
Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, expects technology and AI-related businesses to account for a substantial proportion of overall earnings growth.
“It’s all AI and, to a lesser extent, energy and materials, but that’s because of geopolitics,” Samana said. “It wouldn’t surprise me if 70-80% of the growth can be attributed to tech and AI.”
Energy sector earnings are projected to increase approximately 115% compared with the third quarter of 2025, following a roughly 30% rise in U.S. crude oil prices during the period amid the ongoing U.S.-Israeli conflict with Iran.
By comparison, consumer staples and real estate are among the sectors with the lowest expected year-over-year earnings growth rates.
“Almost as telling is if you look at the sectors that are not related to AI at all,” Samana said.
The differences between sector forecasts indicate that the anticipated increase in aggregate S&P 500 earnings is concentrated in a relatively limited number of industries.
Earnings Growth Expected to Moderate From Second Quarter
Although analysts anticipate another quarter of double-digit earnings growth, the third-quarter increase is expected to be smaller than the expansion recorded during the preceding three months.
According to LSEG, S&P 500 earnings increased nearly 54% year over year in the second quarter, the highest growth rate since 2021.
Excluding mark-to-market gains recorded by Alphabet and Amazon.com on AI-related investments, second-quarter earnings growth was approximately 35%, also the highest since 2021.
Analysts expect most companies to report results above consensus estimates during the third-quarter earnings season, consistent with historical reporting patterns.
However, market strategists are assessing whether the current pace of earnings expansion can be sustained as AI-related capital expenditure continues.
“A concern for investors is we are kind of approaching peak earnings growth” for the current cycle, said Anthony Saglimbene, chief market strategist at Ameriprise Financial. “A lot of this AI trade is built on continued capex spending, and every quarter we go, and they continue to spend, the hurdle rates get higher and the scrutiny gets larger.”
Semiconductor Earnings Forecast to Increase 136%
U.S. semiconductor companies are expected to report earnings growth of approximately 136% year over year for the third quarter, according to LSEG data cited by Dhillon.
That compares with earnings growth of around 158% in the second quarter, indicating a moderation in the rate of expansion despite continued demand associated with AI infrastructure investment.
Nick Raich, chief executive of independent research firm Earnings Scout, said the pace of upward revisions to corporate earnings estimates has begun to slow.
“Earnings estimate revision momentum is starting to cool,” Raich said.
“We’re still going 100 miles an hour in the AI infrastructure buildout, but three months ago we were going 150 miles an hour.”
Raich nevertheless pointed to recent corporate results as evidence that companies supplying AI-related infrastructure continue to benefit from investment activity.
Among them, Micron Technology (NASDAQ:MU) last month forecast quarterly revenue above analysts’ expectations and reported that customers had increased commitments under long-term supply agreements to $32 billion.
Separately, Google entered into a substantial power supply agreement with Constellation Energy this week, reflecting continued investment in infrastructure associated with its operations.
Higher Bond Yields Add to Earnings Considerations
Investors are also expected to examine the effects of rising interest rates on corporate profitability during the reporting season.
U.S. bond yields have increased amid inflation concerns, higher oil prices and fiscal uncertainty in France and other markets.
Samana identified companies with substantial borrowing requirements, including utilities, as potentially more exposed to higher financing costs.
The upcoming results will provide further information on the distribution of earnings growth across the S&P 500, the pace of AI-related investment and the effects of borrowing costs on corporate performance.
While analysts continue to forecast substantial aggregate earnings growth, estimates indicate that technology, AI-related businesses and energy companies will account for a large proportion of the increase.