The earnings season has started with a blast. As of Friday morning, 49 of the S&amp;P500 companies had reported second-quarter earnings, with 85% beating expectations and the index on track for a blockbuster 23% year-over-year gain for the quarter. According to FactSet, analysts now expect S&amp;P500 operating earnings to reach $340.74 for 2026 as a whole, up 24% from 2025, following strong back-to-back gains of 10% and 13% in 2024 and 2025 respectively.

A Top Down View of the Earnings Surge

Notes on the Week Ahead

[SPEAKER_A] Hello and welcome to Notes on the Week Ahead, a J.P. Morgan Asset Management podcast that provides insights on the markets and the economy to help you stay informed in the week ahead. Hello, this is David Kelly. I'm Chief Strategist here at J.P. Morgan Asset Management. Today is July 20th, 2026. <p>The earnings season has started with a blast. As of Friday morning, 49 of the S&P500 companies had reported second-quarter earnings, with 85% beating expectations and the index on track for a blockbuster 23% year-over-year gain for the quarter. According to FactSet, analysts now expect S&P500 operating earnings to reach $340.74 for 2026 as a whole. —up 24% from 2025, following back-to-back strong gains of 10% and 13% in 2024 and 2025 respectively. This profit surge is normally analyzed in terms of companies and sectors, and recent gains look particularly concentrated with 10 companies, mostly in tech, accounting for 75% of the expected growth in second-quarter earnings. When questions are asked about the sustainability of the profit surge, The investigation usually centers first on whether genuine revenues from AI technology can ramp up fast enough to justify current capital spending, and second, on how broadly the ripple effects of AI investment spending and wealth creation could ripple out across the economy. However, profit growth has been outpacing overall economic growth for decades, and a top-down macro perspective can also be useful in identifying the broader forces that have fueled this surge. In broad terms, profit growth has been powered by the ability of US firms to control compensation costs while taking advantage of a more favorable interest rate and tax environment. This begs the question of whether these beneficial forces can continue and whether other broad forces might slow or reverse the profit surge.

A Top Down View of the Earnings Surge

Read the full transcript

The candid version is on a podcast,
not the earnings call.

A Top Down View of the Earnings Surge

Read the full transcript

The candid version is on a podcast, not the earnings call.

The candid version is on a podcast,
not the earnings call.