AI Giants Set to Drive Most of Q3 US Earnings Growth as Investors Watch for a Peak

US companies are on track for another strong earnings quarter, and AI related firms are powering most of it. Analysts expect S&P 500 earnings to climb about 31% from a year ago, according to LSEG’s Tajinder Dhillon. Roughly two thirds of that jump comes from the technology sector and AI heavyweights Alphabet, Amazon and Meta. Tech gains helped push the S&P 500 to a record this week, with earnings season set to open next week as JPMorgan Chase and Goldman Sachs report.

Energy Surges While Staples and Real Estate Lag

Energy earnings are projected to jump about 115%, as US oil prices rose roughly 30% in the quarter because of the US-Israeli war with Iran. Wells Fargo’s Sameer Samana said 70-80% of growth could trace back to tech and AI, and noted that consumer staples and real estate show some of the weakest estimates.

Is AI Earnings Growth Peaking?

Second quarter earnings rose nearly 54%, the highest since 2021, or about 35% excluding mark-to-market gains at Alphabet and Amazon. Ameriprise’s Anthony Saglimbene warned the cycle may be nearing peak growth, since the AI trade depends on continued capex and scrutiny rises each quarter.

Semiconductor Earnings Cool but Stay Strong

Chip earnings are expected to grow about 136%, down from 158%. The Earnings Scout’s Nick Raich said the buildout is moving at 100 miles an hour versus 150 three months ago. Micron raised its outlook, with long-term supply commitments at $32 billion, and Google signed a major power deal with Constellation Energy. Investors will also watch how higher interest rates affect profits.