IT之家 October 10 news: According to a Reuters report on the 9th, US corporate profits for the third quarter of this year are expected to surge once again, and, like the recent rally in US stocks, AI companies will contribute most of the growth.
Tjedil, head of earnings and equity research at LSEG, said analysts widely expect S&P 500 constituent companies' Q3 earningsto grow about 31% year-on-year, with roughly two-thirds of the increase coming fromthe technology sectorand AI giants such as Google parent Alphabet, Amazon and Meta.
Boosted by the rise in tech stocks, the S&P 500 indexhit a record high this week. As banks such as JPMorgan and Goldman Sachs are expected to release results next week, the US Q3 earnings season will also kick off in an informal way.
Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, pointed out: "Earnings growthis almost entirely dependent on AI. The energy and materials sectors also contributed, but much less, and mainly driven by geopolitical factors. I wouldn't be at all surprised if tech and AI contributed 70% to 80% of the growth."
However, market strategists are not sure whether Q3's earnings growthcan surpass Q2's strong performance. Most companies are usually able to deliver results that beat analyst expectations, and Q3 is not expected to be an exception.
LSEG data show that S&P 500 constituent companies' Q2 earnings grew nearly 54% year-on-year, the highest level since 2021. Even excluding the market-cap revaluation gains from Alphabet's and Amazon's AI investments, the increase still reached about 35%, also the highest since 2021.
Anthony Saglimbene, chief market strategist at Ameriprise Financial, said: "Investors worry that this earnings growth cycle is approaching its peak. The AI investment boom relies heavily on companies continuing to pour in huge amounts of capital. As companies keep spending money every quarter, the market's demands on performance are rising, and scrutiny is getting stricter."
Dilong, citing LSEG data, said that US semiconductor companies benefiting from the AI boom are expected to see Q3 earnings grow about 136% year-on-year, down from Q2's roughly 158% increase.
Nick Raich, CEO of independent research firm The Earnings Scout, said: "The momentum of earnings estimate revisions is starting to cool. AI infrastructure buildout is still moving at high speed; using a car speed analogy, it's like 161 kilometers per hour, but three months ago it was 241 kilometers."
He believes that strong recent earnings reports from companies such as Micron Technology show that other companies are still benefiting from the AI boom. Micron said last month that its quarterly revenue would exceed analyst expectations, and that the purchase amounts customers committed to under long-term supply agreements had risen to US$32 billion (IT之家 note: about 214.607 billion yuan at the current exchange rate).