Earnings continue to set records

With nearly 90% of S&P 500 Index companies having reported their second-quarter earnings, the bottom line has surprised by over 29% thus far compared to analyst estimates (see the chart).

We highlighted a similar strong trend during the first-quarter reporting season, yet fundamentals continue to outpace expectations, marking this the second quarter in a row of some of the best aggregate earnings the market has seen in recent memory.

It is worth noting that several one-off items related to tariff refunds (for Amazon) and unrealized gains in private AI holdings (for Alphabet and Microsoft) skew these numbers higher, but even after stripping these one-time effects out and the trends remain. Excluding the 10 largest companies by market cap, the S&P 500 Index still delivered an earnings surprise of nearly 12%, up from 10% last quarter, pointing to broad-based strength beyond the market’s largest names.