Broad-Based Earnings Growth Expected in 2026

• For Q4 2025, S&P 500 earnings expected up 7.9% year-over-year, marking the 10th consecutive quarter of positive growth, with Tech sector leading at +15.4%
• Nine sectors forecast to achieve double-digit earnings growth in 2026, including Aerospace (+38.2%), Autos (+22.6%), and Basic Materials (+20.3%)
• The 'Magnificent 7' companies expected to grow earnings 17.3% in Q4 2025, while the rest of the index would grow only 4.6% without their contribution

Market Summary: Broad-Based Earnings Growth Expected in 2026

Key Earnings Projections

The S&P 500 is poised for its 10th consecutive quarter of positive earnings growth in Q4 2025, with total earnings expected to rise +7.9% year-over-year on +8.2% higher revenues. Looking ahead to 2026, total S&P 500 earnings are projected to grow +12.9% for the full calendar year, dropping to +9.3% when excluding the Technology sector.

Sector Performance

For the first time since 2018, all 16 Zacks sectors are expected to post positive earnings growth in 2026. Nine sectors will achieve double-digit growth, led by:

• Aerospace: +38.2%
• Autos: +22.6%
• Basic Materials: +20.3%
• Technology: +19.9%
• Transportation: +13.6%
• Industrials: +11.1%

Technology Sector Dominance

The Technology sector continues as the primary earnings growth driver, expected to deliver +15.4% earnings growth in Q4 2025 on +16.3% higher revenues—marking its 10th consecutive quarter of double-digit growth. The sector accounts for 35.9% of the index's total earnings and 43.1% of its market capitalization. Tech earnings are projected to grow +19.9% in 2026, following an expected +20.0% in 2025.

Magnificent 7 Impact

The "Magnificent 7" companies (including NVIDIA, Apple, and Tesla) show Q4 earnings growth of +17.3% on +16.5% higher revenues. Excluding these tech giants, the rest of the S&P 500 would post only +4.6% earnings growth, highlighting their outsized influence.

Market Implications

The broadening earnings growth across all sectors signals healthier market fundamentals, though Technology's dominance remains substantial. Persistent positive estimate revisions in Tech suggest