Foreign media report that U.S. stock market expectations for the second half of 2026 have improved significantly compared to the beginning of the year, primarily due to stronger corporate earnings than previously anticipated. The S&P 500 has risen more than 7% year-to-date as of the end of June, and Wall Street has simultaneously raised its full-year earnings forecasts.
Profit growth accelerated in the first quarter.
The report noted that S&P 500 companies posted a 28% year-over-year increase in first-quarter profits, among the fastest growth rates since 2021. Since January, Wall Street has raised its full-year earnings forecasts by approximately 10%.
Fidelity believes that the current pace of earnings growth resembles the early stages of an economic recovery rather than the typical rhythm seen in the later stages of a prolonged bull market. Capital Group also notes that corporate earnings continue to accelerate.
AI spending drives growth across more sectors
The main driver behind this round of improved expectations remains AI capital expenditures. Reports indicate that Alphabet, Microsoft, Amazon, Meta, and Oracle plan to collectively invest over $700 billion this year in building data centers, boosting performance across the chip and storage supply chains.
As manufacturing returns to an expansion phase, BCA Research expects median earnings for S&P 500 companies to grow by 14% over the next year. The article notes that the benefits are no longer limited to large technology stocks, as utilities, industrials, and materials sectors are also beginning to attract attention.
Oil prices and high valuations remain risks.
The article also noted that the oil price surge triggered by the war in Iran pushed inflation to its highest level in three years earlier this year, and the Federal Reserve is assessing whether another interest rate hike is necessary.
JPMorgan warns that some high-growth stocks have been significantly pushed up by capital flows, making this year's strongest-performing stocks more vulnerable to rapid pullbacks. Barclays believes the next phase of AI trading may expand from infrastructure providers to companies that are truly monetizing AI.
Additional information: The configuration perspectives mentioned in the text are primarily sourced from Fidelity, Capital Group, BCA Research, JPMorgan Chase, Barclays, and Wells Fargo. This is a compilation of institutional viewpoints and not a single official data disclosure.