The S&P 500 is on track to post a net profit margin of 15.7% for Q2 2026, the highest level in data going back to 2009, according to The Kobeissi Letter. The surge is driven by AI-fueled earnings growth, with second-quarter earnings for the index expected to rise 38% year-on-year—the highest growth rate since the third quarter of 2021, as noted by Chief Market Strategist at Creative Planning Charlie Bilello. This week marks a critical juncture as four of the 'Magnificent Seven' tech companies—Amazon, Apple, Meta, and Microsoft—report quarterly results amid heightened investor focus on whether capital expenditure in AI can translate into sustained growth.
Alphabet Reports $119.8 Billion Revenue, Drives S&P 500 Margin Gains
Alphabet Inc. was the single largest margin contributor to the S&P 500's projected profit margin after significantly beating earnings estimates, according to The Kobeissi Letter. The company reported revenue of $119.8 billion for the June quarter, up 24% from a year earlier and ahead of analysts' expectations. Alphabet's earnings per share of $9.11 far exceeded analysts' expectations of $2.91 per share.
The Kobeissi Letter noted that 86% of reporting S&P 500 firms have beaten EPS estimates so far, while 80% have exceeded revenue expectations. "AI is driving historic earnings growth," the firm stated. Bilello echoed this assessment, stating that "we've never seen earnings growth this high outside of post-recessionary rebounds. An unprecedented boom fueled by massive EPS gains in big tech."
Amazon, Apple, Meta, Microsoft Release Q2 Earnings This Week
Amazon.com Inc., Apple Inc., Meta Platforms Inc., and Microsoft Corp. are all reporting quarterly results this week. Analysts expect Amazon to post nearly 8% growth in earnings per share to $1.81, while Apple's estimates are at $1.89, representing growth of about 20%. Forecasts suggest that Meta and Microsoft will post 3% and 16% EPS growth, respectively.
Markets will be watching capital expenditure spending as concerns grow around whether the expenses can translate into growth for these AI names. The S&P 500 has lost about 1% so far this quarter, although it has gained more than 8% in 2026. The State Street SPDR S&P 500 ETF Trust (SPY), iShares Core S&P 500 ETF (IVV), and Vanguard S&P 500 ETF (VOO), which track the S&P 500, have posted similar results.
FAQ
What is the S&P 500's projected net profit margin for Q2 2026?
The S&P 500's net profit margin is on track to reach 15.7% for Q2 2026, the highest level in data going back to 2009, according to The Kobeissi Letter.
Why is the S&P 500 experiencing record earnings growth?
The S&P 500's second-quarter earnings are expected to rise 38% year-on-year, driven by AI-fueled gains in Big Tech companies. Alphabet was the single largest margin contributor after beating earnings estimates with $119.8 billion in revenue and $9.11 earnings per share.
Which Big Tech companies are reporting earnings this week?
Amazon, Apple, Meta, and Microsoft are all releasing quarterly results this week. Analysts expect Amazon EPS of $1.81 (+8% growth), Apple EPS of $1.89 (+20% growth), Meta EPS growth of 3%, and Microsoft EPS growth of 16%.
