Artificial intelligence is increasingly translating from massive corporate investment into equally significant earnings growth across the S&P 500.
Wall Street expects S&P 500 earnings for 2026 to rise roughly 32% from a year earlier, while second-quarter results have dramatically exceeded analyst forecasts. At the late stage of earnings season, 86% of companies had reported earnings per share above expectations, according to FactSet, compared with five- and 10-year averages of 78% and 76%.
The earnings strength gives more fundamental support to a rally that has been dominated by artificial-intelligence companies. Coinpaper has tracked how AI stocks have repeatedly pushed the S&P 500 higher, particularly as chipmakers and data-center companies benefit from record infrastructure spending.
Alphabet and Amazon Supercharge Earnings
The headline numbers are impressive, but Big Tech contributed an unusually large boost.
Alphabet reported second-quarter earnings that included a $98 billion gain, while Amazon recorded $53.4 billion in non-operating pre-tax income, primarily related to its Anthropic investments. FactSet said those two companies were largely responsible for the extraordinary size of the S&P 500 earnings surprise.
Their results illustrate a second way the AI boom is affecting corporate profits: companies are benefiting not only from selling cloud services, chips and AI products, but also from rising valuations of private AI investments.
Still, the strength extends beyond accounting gains. Reuters analysis found S&P 500 earnings increased about 33% even after excluding major AI investment gains, the strongest underlying growth since 2021. Technology earnings jumped 74%, while energy also posted exceptionally strong growth.
The expansion comes as Nvidia continues to demonstrate the scale of demand for AI infrastructure. Its latest quarter produced $96.2 billion in revenue, more than double the year-earlier level, reinforcing the spending cycle explored in Coinpaper's latest Nvidia earnings coverage.
Wall Street Raises Its S&P 500 Targets
Strong profits are now pushing Wall Street strategists toward higher market forecasts.
Barclays raised its year-end S&P 500 target to 7,950 from 7,800 and increased its 2026 EPS forecast to $365 from $337, citing resilient economic activity, strong corporate earnings and continued AI investment. Reuters reported that several other major banks also expect the index to reach or exceed 8,000.
However, investors still face a key question: whether enormous AI capital spending can continue generating attractive returns. Coinpaper's guide to measuring AI spending returns highlights revenue growth, margins, cash flow and return on invested capital as the metrics that ultimately matter.
For now, earnings suggest corporate America is converting the AI investment boom into profits faster than analysts expected.