S&P 500 earnings growth relies on tech and energy as broader profit gains slow

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S&P 500 earnings growth

Highlights

S&P 500 overall profit growth is nearly 30% year-on-year in Q3, but expansion is heavily concentrated in technology and energy sectors.
Earnings growth for S&P 500 excluding tech and energy slows to 7% in Q3 from 12% in Q2, per Savita Subramanian.
Chipmakers and energy firms expected to report 130% and 122% earnings growth respectively, while broader equities risk downside if forecasts disappoint.

Profit growth concentration in third quarter

As reported by CNBC, the U.S. corporate earnings season is opening with mixed results from major financial companies while overall S&P 500 profit growth still tracks at nearly 30% year on year, based on FactSet data.

JPMorgan Chase reports a rare bottom-line miss, Wells Fargo posts mixed third-quarter results, Citigroup beats estimates on earnings while revenue only narrowly exceeds consensus, and Goldman Sachs delivers a strong beat on both revenue and profit. UnitedHealth also tops estimates and raises its full-year profit outlook.

Even with that uneven start, most of the expected earnings expansion is concentrated in two sectors. Energy companies are set to post sharp profit increases as oil prices remain elevated because of the war in the Middle East, while technology companies continue benefiting from spending tied to the artificial intelligence buildout.

Market risks from elevated expectations

Outside tech and energy, earnings momentum is slowing. Strategist Savita Subramanian says S&P 500 earnings growth excluding those two sectors is expected to slow to 7% in the third quarter from 12% in the second quarter.

That gap broadly matches stock market performance in 2026, with technology up 36% and energy up 49%, making them the best-performing sectors this year. BofA says chipmakers and energy companies are expected to deliver earnings growth of 130% and 122%, respectively, from the year-earlier period.

If those elevated forecasts are not met while the rest of the market continues to show weaker growth, broader equities could come under pressure. Subramanian says index earnings per share remain highly dependent on the durability of the AI capital spending cycle and on successful monetization, while the interaction of geopolitics, interest rates and technology may be underestimated because higher capital costs and geopolitical bottlenecks could disrupt what has so far been a relatively smooth earnings story.

Our earlier article on Paul Tudor Jones’ oil price outlook amid the Iran conflict explained why he expects crude to rally another $20–$25, potentially pushing U.S. oil above its prior 2026 closing high. We also noted that a sharp energy-price spike could pressure equities and highlighted how heightened risks around Middle East supply routes can act as an additional catalyst for higher oil prices.

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