By Christopher Combs
Chief Investment Officer
Silicon Valley Capital Partners
July 3, 2026
As second-quarter earnings season begins, corporate America is entering one of the strongest reporting periods in several years. While investors remain focused on interest rates, tariffs, and geopolitical developments, earnings continue to be the primary driver of long-term stock prices. The data heading into this reporting season suggest that the fundamental backdrop remains favorable.
- Analysts Became More Optimistic During the Quarter
One of the most encouraging developments this quarter is that analysts raised earnings expectations as the quarter progressed. Historically, Wall Street analysts reduce earnings estimates during the quarter as companies provide updates and expectations become more realistic. This quarter has been different.
Second-quarter earnings estimates increased approximately 3.4% from the beginning of April through the end of June, a sharp contrast to the average decline seen over both the past five and ten years. Companies also issued an unusually high number of positive earnings outlooks, reflecting improving business conditions and stronger-than-expected demand across much of the economy.
This type of upward revision cycle is uncommon and often signals improving corporate fundamentals.
- Another Exceptional Earnings Season Appears to Be Ahead
Current estimates call for the S&P 500 to deliver approximately 23.3% year-over-year earnings growth and 12.2% revenue growth during the second quarter.
If achieved, this would mark the second consecutive quarter with earnings growth exceeding 20%, the seventh consecutive quarter of double-digit earnings growth, and the strongest revenue growth since 2022.
Importantly, these expectations are being supported by rising revenues rather than cost-cutting alone. Healthy revenue growth generally reflects improving demand and a stronger business environment, providing a more durable foundation for corporate profitability.
- Artificial Intelligence Continues to Drive Corporate Earnings
The largest upward revisions to earnings expectations have been concentrated in the Information Technology and Energy sectors. Within technology, companies benefiting from artificial intelligence infrastructure spending continue to lead earnings growth.
Demand for AI computing, cloud infrastructure, networking equipment, semiconductors, memory, power systems, and data center construction remains exceptionally strong. At the same time, energy companies have benefited from improving commodity fundamentals, creating another important source of earnings strength for the broader market.
While market volatility will undoubtedly continue, the underlying earnings picture remains considerably stronger than many investors appreciate.
Investment Perspective
Markets ultimately follow earnings over time. Although headlines surrounding monetary policy, geopolitical events, and economic uncertainty will continue to create short-term volatility, sustained earnings growth has historically been one of the strongest drivers of long-term equity returns.
Heading into this earnings season, corporate fundamentals remain constructive. Companies are raising expectations rather than lowering them, revenues continue to accelerate, and artificial intelligence remains one of the most powerful secular growth themes in decades.
As always, we will be watching not only whether companies meet expectations, but also the quality of management commentary regarding capital spending, hiring, AI adoption, consumer demand, and forward guidance. Those insights will help determine whether today’s optimistic outlook extends into the second half of 2026.