AI and Technology Expected to Drive Two-Thirds of S&P 500 Earnings Growth in Q3

Artificial intelligence-related companies are expected to account for much of the anticipated increase in U.S. corporate earnings during the third quarter of 2026, with analysts forecasting overall S&P 500 profit growth of approximately 31% compared with a year earlier.

According to LSEG earnings and equity research head Tajinder Dhillon, around two-thirds of the projected increase is expected to come from the technology sector and AI-related companies, including Alphabet (NASDAQ:GOOG), Amazon.com (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META).

The earnings outlook follows a period of gains in technology shares that helped lift the S&P 500 to a record high this week.

Investors are preparing for the quarterly reporting season, which is expected to begin next week with financial results from JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) and other major banks.

Sector Forecasts Show Differences in Earnings Growth

Technology and AI-related businesses are expected to account for the largest share of third-quarter earnings expansion, although energy companies are also forecast to report substantial increases.

Wells Fargo Investment Institute’s Sameer Samana estimates that technology and AI could contribute between 70% and 80% of overall earnings growth.

Energy sector profits are projected to increase approximately 115% year over year, following a roughly 30% rise in U.S. oil prices during the third quarter amid the ongoing U.S.-Israeli war with Iran.

Other sectors are expected to report considerably lower growth rates. Consumer staples and real estate are among the industries with the smallest projected increases in earnings compared with the same period last year.

The sector forecasts suggest that aggregate S&P 500 earnings growth will depend heavily on the performance of companies associated with AI investment and energy markets.

Third-Quarter Growth Forecast Below Previous Quarter

The expected 31% increase in third-quarter earnings would represent a moderation from the second quarter, when S&P 500 profits rose nearly 54% year over year, according to LSEG.

That was the highest reported growth rate since 2021.

Excluding mark-to-market investment gains recorded by Alphabet and Amazon.com, second-quarter earnings increased approximately 35%, also representing the highest growth rate since 2021.

Market strategists expect many companies to exceed analysts’ earnings estimates during the third-quarter reporting period, although questions remain about the sustainability of the current growth cycle.

Anthony Saglimbene, chief market strategist at Ameriprise Financial, said continued investment in AI infrastructure has raised expectations for corporate performance.

He noted that successive quarters of capital spending increase the financial performance required to sustain investor expectations, particularly among companies benefiting from AI development.

Semiconductor Profit Growth Expected to Moderate

Earnings among U.S. semiconductor manufacturers are forecast to increase approximately 136% compared with the third quarter of 2025, according to LSEG data.

The projected growth rate is below the roughly 158% increase recorded in the second quarter.

Nick Raich, chief executive of Earnings Scout, said upward revisions to earnings forecasts are beginning to slow, although AI infrastructure investment continues at a substantial pace.

Raich cited recent results from Micron Technology (NASDAQ:MU) as an indication that companies supplying AI-related infrastructure continue to receive orders and investment commitments.

Micron last month issued a quarterly revenue forecast above market expectations and reported that customer commitments under long-term supply agreements had reached $32 billion.

Google also entered into a substantial power agreement with Constellation Energy this week, adding to developments associated with infrastructure spending.

Rising Borrowing Costs Remain Under Review

Alongside AI-related spending, investors are expected to focus on the effects of higher interest rates on corporate earnings.

U.S. bond yields have increased amid inflation expectations, rising oil prices and concerns about public debt in France and other countries.

Samana identified utilities and other companies that rely heavily on borrowing as potentially exposed to higher financing costs.

The third-quarter reporting season will provide updated information on whether AI-related companies can maintain their recent earnings growth rates and how higher interest expenses are affecting other sectors.

While the overall earnings outlook remains for substantial year-over-year growth, LSEG estimates indicate a slower pace than in the second quarter and continued concentration of profit increases among technology and AI-related businesses.