The S&P 500 has continued to outperform most global equity markets this year, but according to strategists at Barclays, the leadership is narrowing to a few key sectors — and U.S.-focused companies are still better positioned as 2026 approaches.
“Earnings beats remain strong, and margins, FY25 growth outlook and FY25/FY26 EPS revisions outpace global peers,” strategists led by Venu Krishna wrote in a Tuesday note.
They pointed out that U.S. market strength is increasingly concentrated in specific industries, particularly Consumer Discretionary, Communication Services, and Utilities. Big Tech remains the dominant force behind the index’s performance.
“The S&P 500’s leadership remains heavily driven by Big Tech,” the team said, noting that the combined weight of the top 10 constituents by market cap and earnings contribution has reached its highest long-term level.
Several major tech companies are set to report earnings this week, which analysts believe will provide crucial insights into the next phase of the AI investment cycle.
“Notably, options markets are implying earnings-related moves for AI-exposed Big Tech names that, while modestly larger than were recently realized, nonetheless are broadly well contained, likely suggesting markets don’t foresee any outsized vulnerability,” the strategists added.
Looking ahead, FY25 earnings growth for U.S. equities is expected to surpass that of global peers, with consensus forecasts signaling clear acceleration. Barclays analysts also emphasized that “U.S. dominance in earnings revisions for next year continues as well,” with margin expansion remaining a key differentiator. Even excluding technology, U.S. companies are still projected to maintain stronger profitability compared to Europe and Asia.
Valuations reflect this leadership. The S&P 500 currently trades near the upper end of its historical range—sitting in the 94th percentile over the past decade—versus the 81st percentile for European equities and the 89th percentile for Asia-Pacific markets.
Barclays noted that nearly every major U.S. sector sits in at least the top quintile of its 10-year valuation range, reinforcing the appeal of U.S.-centric strategies heading into 2026.