Goldman Sachs: AI-Driven Q2 S&P 500 EPS Expected to Grow 22%, Strongest Since 2021
Taylor Wilson
Goldman Sachs' June 26 report projects S&P 500 Q2 EPS growth of 22% year-over-year — the strongest pre-season estimate since 2021 — with AI infrastructure accounting for nearly 60% of earnings growth; but the high expectations baseline leaves little valuation cushion.
A 22% earnings growth forecast — who is actually driving it?
AI infrastructure companies are expected to contribute nearly 60% of the S&P 500's total Q2 earnings growth.
Micron and Nvidia alone account for over 40% of the index's earnings increment; Broadcom, Microsoft, Alphabet, and Apple are also major contributors.
This means → the headline "22%" is not evenly spread — most of the growth is concentrated in a handful of AI-linked giants.
How wide is the gap between sectors?
Energy earnings are expected to more than double year-over-year; information technology is forecast to grow nearly 60% — these two sectors carry the bulk of the gains.
By contrast, healthcare and consumer sectors show relatively weaker growth.
In plain terms = not every sector is booming — the profit engine is energy and tech, while the rest are simply not dragging the index down.
Last quarter smashed expectations — can that happen again?
In Q1, analysts had forecast 12% earnings growth; the actual figure came in at 27%, beating expectations by 15 percentage points.
Goldman expects Q2 to remain strong, but with the consensus baseline already lifted from 12% to 22%, the room to surprise on the upside has narrowed significantly.
This means → last quarter's "surprise" is hard to replicate — not because fundamentals have weakened, but because the market has already priced in the good news this time.
Margins and AI capex — what worries investors most?
Rising energy prices and supply-chain pressures have pushed up input costs; analysts have already cut margin forecasts since Q1 earnings season. Consensus shows the median S&P 500 company's margin roughly flat versus a year ago.
Hyperscalers — large cloud platforms such as Amazon AWS, Microsoft Azure, and Google Cloud — have committed hundreds of billions of dollars in AI-related capex. Investors are looking for hard evidence that this spending is translating into revenue and profit gains.
Goldman notes that 2026 spending budgets are largely set, but management commentary on 2027 plans will become increasingly important through the rest of the year.
Non-tech companies are also pouring money into AI — where is it coming from?
Goldman observes that many non-tech firms are funding AI investments through new budget additions, not by cutting other spending.
The market remains skeptical about when these outlays will translate into earnings growth.
This reflects a broader trend: AI investment fever has spilled beyond the tech sector into traditional industries, but the "spending now, returns later" phase may last longer than expected.
Sentiment is already very bullish — what happens if earnings disappoint?
Goldman's US equity sentiment indicator has risen to its highest level since December 2024, meaning investors enter earnings season with already elevated expectations.
Over the past year, nearly all of the S&P 500's gains have been driven by earnings growth, not multiple expansion — the forward P/E has held roughly steady at about 20x.
In plain terms = stocks rose because companies actually earned more, not because the market was willing to pay a higher valuation multiple. This means → if Q2 results disappoint, there is no valuation cushion to absorb the blow, and downside risk is concentrated. Goldman maintains its year-end S&P 500 target of 6,800, implying roughly 9% upside from current levels.
Content is for reference only, not financial advice.