Share of companies reporting earnings growth hits four-year high

Investors have one reason to cheer as the S&P 500 heads for its worst week since October: The share of companies posting a rise in quarterly profits is the highest in more than four years.

More than 75% of S&P 500 firms that have reported results so far saw growth in earnings versus a year earlier, according to data compiled by Bloomberg Intelligence. That’s the highest proportion since the third quarter of 2021.

The figures may assuage worries that corporate America’s profit growth is being fueled by only a handful of technology giants. The whopping 310% rally in the so-called Magnificent Seven since end-2022 has helped fuel concerns that the U.S. stock market could be headed for a bubble.

Those worries have accelerated this week, with tech stocks leading declines as investors question the returns from hefty investments into artificial intelligence. The S&P 500 has dropped 2%, set for its worst such retreat since Oct. 10 on worries around sectors including those deemed vulnerable to AI disruption and volatile precious metals prices.

At the same time, there’s more confidence in a wider array of sectors. The equal-weight S&P 500, which dilutes the impact of the tech heavyweights, is up 3.5% this year, outpacing the market-cap weighted benchmark.

The latest reporting season suggests areas including industrials, consumer products and healthcare are now starting to carry their own weight in driving index returns, a trend that investors say is only expected to extend.

“Growth is becoming a bit more abundant and that means earnings are becoming broader as well,” said Guy Miller, chief strategist at Zurich Insurance. “What we are seeing is you don’t have to be in technology companies.”

Standouts among the non-tech cohort include General Motors Co., which jumped 9% after a robust profit outlook. Procter & Gamble Co., which makes everything from toilet paper to laundry detergents and skincare products, also gained on signs of a rebound in U.S. sales.

Strategists, including those at JPMorgan Chase & Co. and Goldman Sachs Group Inc., expect the broadening to continue over the coming months, underpinned by a robust outlook for economic growth that will keep driving company earnings.

“A strong and accelerating pace of economic growth in the first half of 2026 creates larger near-term tailwinds for smaller and more cyclical stocks than for the largest stocks in the market,” Goldman strategist Ben Snider wrote in a recent note.

Analysts are also predicting the earnings gap between the seven biggest tech stocks and the remaining 493 in the S&P 500 will narrow through the rest of this year.

Data tracked by BI show the Magnificent Seven are expected to post an 18% rise in 2026 profits after a 28% surge last year. On the other hand, earnings growth at the rest of the index is projected to accelerate to 12% this year from 8% in 2025.

Jaisinghani and Garcinuno write for Bloomberg.