The Short Version
- Big number: analysts on average expect S&P 500 third-quarter earnings to rise about 31% year over year, with roughly two-thirds of that growth coming from the tech sector and AI heavyweights Alphabet, Amazon and Meta, per Tajinder Dhillon, LSEG’s head of earnings and equity research (Reuters, Oct. 9).
- Chips lead the charge: U.S. semiconductor earnings are projected to have jumped 136% in Q3 after a 158% surge in Q2, according to LSEG data — the clearest read yet of AI infrastructure spending.
- Record setup: tech share gains pushed the S&P 500 to a record high this week ahead of earnings season, which unofficially kicks off with results from JPMorgan Chase and Goldman Sachs.
- The caution: strategists warn the AI-driven momentum is cooling — “We’re still going 100 miles an hour in the AI infrastructure buildout, but three months ago we were going 150,” said Nick Raich of The Earnings Scout.
NEW YORK
Earnings season is about to unofficially begin, and the setup reads like the market story of the entire year: artificial intelligence doing almost all of the heavy lifting. Analysts on average expect S&P 500 earnings to rise about 31% year over year for the third quarter, and roughly two-thirds of that leap is expected to come from the technology sector and AI heavyweights Alphabet, Amazon and Meta, according to Tajinder Dhillon, LSEG’s head of earnings and equity research. The numbers come from Reuters reporting published October 9, as investors brace for a season that starts with the big banks.
The season unofficially kicks off next week with results from JPMorgan Chase and Goldman Sachs. Tech share gains helped the S&P 500 reach a record high this week ahead of that starting gun — the market has already placed its bet on where the growth is coming from.
It is all AI, plus a geopolitics kicker
The breadth of the growth — or the lack of it — is the real story. “It’s all AI and, to a lesser extent, energy and materials, but that’s because of geopolitics,” Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, told Reuters. “It wouldn’t surprise me if 70-80% of the growth can be attributed to tech and AI.”
Energy is the other standout: the sector’s earnings are seen up about 115% from a year ago, with U.S. oil prices having surged roughly 30% in the third quarter amid the ongoing U.S.-Israeli war with Iran, Reuters reported. And the tell, Samana said, is on the other end of the ledger — consumer staples and real estate, sectors with almost nothing to do with AI, carry among the weakest year-over-year earnings growth estimates for the quarter.
This is a two-track economy wearing a stock-market costume. The headline 31% figure looks like broad prosperity. The sector breakdown says it is a concentrated AI-and-energy boom with everything else along for the ride — a dynamic worth remembering when the bank reports land this week and the mega-cap tech names follow.
The chip readout: semiconductors up 136%
If you want one number that captures the AI infrastructure buildout, it is this: earnings from U.S. semiconductor providers — some of the largest beneficiaries of the AI boom — are projected to have risen 136% for the third quarter, after a 158% increase in the second, Dhillon said, citing LSEG data.
That is the number to watch as the reports roll in. Semiconductors sit at the front of the AI capital-expenditure chain — every hyperscaler building data centers to train and run models buys chips first. A 136% print would confirm the buildout is still humming. A meaningful miss would raise the question investors keep circling: how long can the trend continue, and what happens to share prices when it ends? Reuters framed that exact worry in its October 9 report, noting investors are enthusiastic about the hyper growth but nervous about its shelf life.
We have been tracking the darker side of that capex chain all season — the financing structures behind the AI buildout are raising debt fears in their own right, and the AI boom is visibly squeezing consumer tech as capital floods to the same handful of winners. The earnings will tell us whether the winners are still earning it.
Momentum is cooling, not stalling
The most important quote of the pre-season may be the most understated. “Earnings estimate revision momentum is starting to cool,” said Nick Raich, CEO of The Earnings Scout, an independent research firm, in the Reuters report. “We’re still going 100 miles an hour in the AI infrastructure buildout, but three months ago we were going 150 miles an hour.”
Strategists are not sure third-quarter earnings growth can surpass the banner growth of the second quarter. The one cushion: the majority of companies tend to beat analysts’ estimates, and that is likely to be the case again this season, Reuters noted. Beat rates are the market’s quiet safety net — expectations get set low enough that clearing them becomes the base case.
For viewers at home, the watch list is simple. First, the banks: JPMorgan and Goldman set the tone on credit, trading and deal activity — and on what the AI spenders’ corporate clients are actually doing. Then the semiconductors: if the 136% projection holds, the buildout narrative gets another quarter of runway. And finally the hyperscalers themselves — Alphabet, Amazon and Meta, the names carrying two-thirds of the expected growth. When the companies doing most of the growing are also the companies doing most of the spending, the distinction between a customer and a supplier starts to blur. That is the concentration risk hiding inside the 31% headline.
More from the newsroom: the debt behind the AI buildout · AI chip stocks to watch · how the AI boom is squeezing consumer tech
