The second-quarter earnings season for the S&P 500 is well underway, with approximately 27% of companies having reported results as of July 24, 2026. The index is showing robust performance, reporting its highest year-over-year earnings growth rate since Q3 2021. Both the percentage of companies exceeding EPS estimates (86%) and the magnitude of these surprises (39.3%) are above their 5-year and 10-year averages of 78% and 7.0%, respectively.
However, a significant portion of this strong performance is attributed to Alphabet. The company reported an unusually large positive EPS surprise of $9.11 compared to estimates of $2.88, due to a $98 billion gain primarily from unrealized gains on equity securities. Excluding Alphabet, the S&P 500's overall EPS surprise percentage would drop to 12.6% from 39.3%, and the blended earnings growth rate for Q2 2026 would fall to 25.9% from 37.9%. Despite this, the index would still mark its second consecutive quarter of over 20% earnings growth and seventh consecutive quarter of double-digit growth.
Revenue performance is also strong, with 80% of S&P 500 companies reporting actual revenues above estimates, compared to a 5-year average of 70%. In aggregate, companies are reporting revenues 2.8% above estimates. The blended revenue growth rate for Q2 2026 is 13.2%, which would be the highest since Q2 2022. Ten out of eleven sectors are reporting year-over-year growth, with Energy, Communication Services, Information Technology, and Materials leading with double-digit growth. The Health Care sector is the only one reporting a decline.
Analysts are projecting continued strong earnings growth for the remainder of the year, with Q3 2026 and Q4 2026 expected to see growth rates of 27.3% and 24.9%, respectively. The forward 12-month P/E ratio stands at 20.1, which is above both the 5-year average of 19.9 and the 10-year average of 19.0. The blended net profit margin for Q2 2026 is 15.7%, potentially marking the highest since FactSet began tracking this metric in 2009. Alphabet is also the largest contributor to this record net profit margin. Investors are awaiting results from 177 S&P 500 companies, including Amazon.com and Meta Platforms, in the coming week.
This robust earnings season, while significantly influenced by Alphabet's one-time gains, demonstrates a broad-based improvement across many sectors, indicating healthy corporate performance for the S&P 500.
