Earnings Grew 47% Last Quarter — and Two Companies Explain a Third of It
The S&P 500's blended growth rate for the second quarter was the highest since 2021, with 86% of companies beating estimates, but stripping out Alphabet and Amazon cuts the figure to 28.8%.
The second-quarter earnings season produced the strongest profit growth American companies have reported in five years, and an unusually large share of it came from two balance sheets.
The blended earnings growth rate for the S&P 500 reached 47.4%, the highest since the second quarter of 2021, when the comparison base was a pandemic-flattened 2020. Excluding Alphabet and Amazon, the figure falls to 28.8% — still a very strong quarter, and a reminder of how much index-level statistics now depend on a handful of companies.
The beat rate was extraordinary
About 86% of companies reported earnings above analyst estimates, against a five-year average of 78% and a ten-year average of 76%. The aggregate size of the surprise was on track to be the largest since the data began being tracked in 2008.
Beat rates that high usually say as much about estimates as about results. Analysts spent the spring marking forecasts down through an oil shock, a rebuilt tariff regime and a labor market that stopped adding jobs. Companies then cleared a bar that had been lowered.
Where the growth came from
Ten of the eleven sectors reported year-over-year earnings growth, and eight of those grew at double-digit rates. Energy led, which follows directly from crude prices that spent the year far above 2025 levels. Communication services, consumer discretionary, information technology and materials also posted double-digit gains.
That breadth is the genuinely encouraging part of the season. For three years, index earnings growth was a technology story with everything else flat.
The quality question
Analysts have flagged how much of the profit at two of the largest companies came from mark-to-market gains on investment holdings rather than from operations — a category that inflates reported earnings in a rising market and reverses in a falling one.
It is the same issue that made the first quarter look better than it was, and it is why the ex-Alphabet-and-Amazon number is the one most professional investors are quoting.
What it means for the market
The S&P 500 set records in the week after the season effectively ended, and at roughly 11% higher for the year the index is being carried by earnings rather than by multiple expansion — which is the healthier of the two ways for a market to rise.
The risk is what these comparisons look like a year from now, when the base is this quarter.
