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S&P 500 EPS growth above 20% is rare. Why 2027 may be at risk

Investing.com -- S&P 500 companies are on course for 32% year-on-year EPS growth in the second quarter of 2026, following a 30% jump in Q1. This back-to-back earnings run rivals the strongest on record. Bank of America strategists led by Savita Subramanian, noted that such streaks of 30%-plus EPS growth have occurred only 10 times since 1936, with the most recent examples tied to deep earnings recessions — the Covid collapse and the global financial crisis, not the organic AI-driven expansion currently underway. That historical anomaly is now shaping how Wall Street thinks about the equity outlook into 2027. With nearly 90% of S&P 500 results reported for the June quarter, BofA's data show EPS rising 30% year-on-year excluding investment gains at Alphabet and Amazon, with a 76% EPS beat rate, the strongest since 2021. According to Reuters, of the 436 companies that had reported through August 8, 85.1% topped analyst expectations, well above the long-term average of 68% since 1994. JPMorgan raised its 2026 S&P 500 EPS estimate to $365 yesterday, implying roughly 35% year-over-year growth and above the Street consensus of $358, and lifted its year-end price target to 8,000 from 7,800, citing broad-based earnings strength and clearer AI monetisation. That target implies about 3.1% upside from the index's last close of 7,753.11 as of Monday. JPMorgan noted, however, that private-company stake valuations are boosting reported 2026 EPS by roughly $18 based on first-half marks; stripped of that contribution, normalised EPS would be $347, up approximately 28% year-over-year. Cloud infrastructure is central to the bull case. AWS revenue growth accelerated to 37% year-over-year in Q2, Azure grew 43%, and Google Cloud posted record 82% growth, reinforcing what JPMorgan strategists described as the AI-capex-to-revenue conversion thesis. The bank projects consensus AI capital spending of roughly $900 billion by year-end 2026, up 85% year-over-year, and topping $1.2 trillion by end of 2027. "As elevated backlogs convert into recognised revenue, cloud growth should remain well supported, helping validate rising AI capex, strengthen order coverage, and further ease ROIC concerns," JPMorgan analysts said. At least seven brokerages now share JPMorgan's 8,000 year-end target for the S&P 500, according to Investing.com's market context data, reflecting how thoroughly the earnings upgrade cycle has shifted institutional sentiment. The index has gained approximately 13.3% year-to-date through early August 2026, buoyed by AI optimism and a Q2 beat rate that materially exceeded historical norms. Story Continues "Consensus expects growth to fall below 20% in 1Q27 and moderate to the mid-teens for full-year 2027," the Subramanian team wrote. "While those growth rates are healthy by historical standards, markets tend to become less supportive as earnings growth decelerates, with years of above-trend but slowing EPS growth typically producing weaker equity returns." The concern is compounded by the unusual nature of the current streak: prior 30%-plus EPS runs followed sharp contractions, giving them a mechanically low base; this one does not. Several near-term catalysts could validate or complicate that deceleration thesis. July CPI data lands Wednesday, with economists polled by Reuters projecting a 3.4% year-over-year reading versus 3.5% prior, a modest cooling that, if confirmed, would ease pressure on Fed rate expectations and support elevated equity multiples. The same day brings a $125 billion Treasury note auction, a supply dynamic JPMorgan cited as a reason to keep its forward multiple capped at roughly 20x despite the earnings momentum. Related articles S&P 500 EPS growth above 20% is rare. Why 2027 may be at risk Wolfe Research outlines eight risks that could spark stock declines in 2026 This sector is 'poised for a big, beautiful year': Truist View Comments

1 Mega-Cap Stock with Impressive Fundamentals and 2 We Brush Off

1 Mega-Cap Stock with Impressive Fundamentals and 2 We Brush Off "Too big to fail" is how we would describe the megacap stocks in this article today. While they will likely stand the test of time, it's not all sunshine and rainbows as their scale can limit their ability to find new sources of growth. These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you find high-quality companies that can grow their earnings no matter what. Keeping that in mind, here is one industry titan with attractive long-term potential and two whose existing offerings may be tapped out. Two Mega-Cap Stocks to Sell: Intel (INTC) Market Cap: $503.4 billion Inventor of the x86 processor that powered decades of technological innovation in PCs, data centers, and numerous other markets, Intel (NASDAQ:INTC) is a leading manufacturer of computer processors and graphics chips. Why Do We Steer Clear of INTC? Customers postponed purchases of its products and services this cycle as its revenue declined by 4.9% annually over the last five years Performance over the past five years was negatively impacted by new share issuances as its earnings per share dropped by 27.1% annually, worse than its revenue Cash-burning tendencies make us wonder if it can sustainably generate shareholder value Intel's stock price of $100.21 implies a valuation ratio of 60.5x forward P/E. If you're considering INTC for your portfolio, see our FREE research report to learn more. Bank of America (BAC) Market Cap: $440.5 billion Tracing its roots back to 1784 and now serving approximately 67 million consumer and small business clients, Bank of America (NYSE:BAC) is a global financial institution that provides banking, investing, asset management, and risk management products and services to individuals, businesses, and governments. Why Does BAC Give Us Pause? Large revenue base makes it harder to expand quickly, and its annual net interest income growth of 9% over the last five years was below our standards for the banking sector Weak unit economics are reflected in its net interest margin of 2%, one of the worst among bank companies Capital generation will likely be soft over the next 12 months as Wall Street's estimates imply tepid tangible book value per share growth of 7.4% Bank of America is trading at $63.05 per share, or 1.6x forward P/B. Read our free research report to see why you should think twice about including BAC in your portfolio, it's free. One Mega-Cap Stock to Buy: Philip Morris (PM) Market Cap: $293.1 billion Founded in 1847, Philip Morris International (NYSE:PM) manufactures and sells a wide range of tobacco and nicotine-containing products, including cigarettes, heated tobacco products, and oral nicotine pouches. Story Continues Why Will PM Outperform? Differentiated product offerings are difficult to replicate at scale and result in a best-in-class gross margin of 67% Disciplined cost controls and effective management resulted in a strong two-year operating margin of 37%, and its profits increased over the last year as it scaled PM is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it's becoming a less capital-intensive business At $188.12 per share, Philip Morris trades at 21.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it's free. High-Quality Stocks for All Market Conditions WHILE YOU'RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that made our list in 2020 include

Corporate earnings soared in Q2, with AI as the 'growth engine': Chart of the Day

As the second quarter earnings season begins to wind down, Wall Street and Main Street alike are tallying up the scores, and the numbers have been unquestionably strong. With just under 90% of companies in the S&P 500 (^GSPC) having released second quarter earnings, roughly 80% have reported year-on-year EPS growth, putting the quarter in the 94th percentile for the metric, per Bank of America research. Those results, plus Wall Street consensus forecasts for the third and fourth quarters, put the S&P 500 on track for four consecutive quarters of EPS growth exceeding 20%, per BofA, a phenomenon that has only happened 10 times since 1936.EPS growth at AI-related companies averaged 28% year-on-year in the second quarter, per Bank of America.·AlphaSpace Part of that story, according toBank of America strategists led by Savita Subramanian, is the AI boom that has largely been driving the US equity market. The second quarter has seen broad earnings growth, with 10 out of 11 sectors on pace for positive year-on-year movement, BofA noted. Yet, "even so, AI remained the index's primary growth engine," the strategists wrote. While the median AI-related stock notched EPS growth of 28%, the median non-AI-related stock saw growth of just 12%. But that strength isn't likely to last forever, the strategists said. While consensus expectations remain strong for the third and fourth quarters, EPS growth is expected to decelerate in 2027, which the strategists said may muddle investors' perceptions. The question for investors now is what happens when that torrential growth slows down. "Markets tend to become less supportive as earnings growth decelerates, with years of above-trend but slowing EPS growth typically producing weaker equity returns," the strategists wrote.Consensus estimates show Wall Street expecting S&P 500 EPS growth to decelerate in 2027, even as it remains above trend, per Bank of America. (Chart: BofA Global Research)·BofA Global Research Apollo Global Management's Torsten Sløk made the same point over the weekend, with data pointing out that while profit margins have been steadily surging in the tech sector, everywhere else in the market has seen little to no profit margin expansion — another sign of how dependent the major indexes have become on the AI boom for their returns. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.) "The bottom line is that the AI capex boom is so far only showing up in the sellers' margins, not the buyers'," Sløk wrote. "This is important because the longer it takes the S&P 493 to generate ROI, the bigger the downside risks to an economy and a market this concentrated in the AI trade."Profit margins outside of tech have remained largely flat, Apollo Global's Torsten Sløk noted. (Chart: Apollo Global Management)·Apollo Global Management That doesn't mean there isn't still a good amount of optimism on Wall Street, On Monday, JPMorgan Chase's equity strategy team, led by Dubravko Lakos-Bujas, raised their year-end S&P 500 target to 8,000 from 7,800, which, if reached, would mark a roughly 3% appreciation from where the index closed on Friday. Story Continues In their note, the strategists wrote, "The earnings picture remains strong and broad-based across multiple sectors." "We argued that the key theme would remain centered on hyperscaler capex guidance … [and] we have seen signs of this playing out during 2Q," the strategists wrote. AI spending, primarily from the hyperscalers, is now expected to rise to $900 billion by year-end, as those companies have raised their spending projections, the strategists said. That compares to total S&P 500 expected capex of $1.5 trillion, which leaves the AI industry responsible for roughly 59% of capital expenditures throughout the index, another sign of the importance of those companies' success to the health of the overall market. But the irony is that investors have in many ways priced the market to perfection,

Bank of America Expands Partnership With Big Brothers Big Sisters of Essex, Hudson & Union Counties to Grow Mentoring and Workforce Development Programming

Nationally Recognized as Big Brothers Big Sisters of America's "Agency of the Year," BBBSEHU Will Connect Thousands of New Jersey Youth Annually to Career Pathways, Higher Education, and Economic Opportunities with BofA's Support Key points Big Brothers Big Sisters of Essex, Hudson & Union Counties received new grant support from Bank of America for their "Big Futures through Mentoring & Workforce Development" initiative Program connects mentored youth to in-demand career paths and professional networks Investment reflects Bank of America New Jersey's growing relationship with Big Brothers Big Sisters of Essex, Hudson & Union Counties and a commitment to workforce development NEWARK, N.J., Aug. 10, 2026 /PRNewswire/ -- Bank of America announced a $50,000 grant to Big Brothers Big Sisters of Essex, Hudson & Union Counties (BBBSEHU) in support of its "Big Futures through Mentoring & Workforce Development" initiative. The investment will help expand the organization's established model of professionally supported one-to-one mentoring that connects young people ages 14-24 in underrepresented and low-income communities to career exploration, college readiness, and long-term economic mobility.Big Brothers Big Sisters of Essex, Hudson, and Union Counties logo The "Big Futures through Mentoring & Workforce Development" initiative goes beyond traditional mentoring to function as a workforce pipeline. Program participants receive career exploration and exposure to in-demand industries including healthcare, finance, law, real estate, and STEM. Mentees participate in corporate site visits and job shadowing, resume workshops, interview coaching, financial literacy training, and college coaching through Bright Horizons. The program also connects participants to internships, scholarships, summer employment, and workforce development opportunities through a robust network of corporate, university, and healthcare partners. A standout component of the initiative is an innovative pilot developed in partnership with St. Peter's University, in which college students earn paid work-study income and academic credit while serving as mentors to younger program participants. BBBSEHU plans to expand this model, creating a scalable structure that simultaneously prepares college students for professional careers and delivers mentorship to the youth who need it most. "Mentorship is one of the smartest investments we can make in our future workforce," said Carlos Lejnikes, President & CEO, Big Brothers Big Sisters of Essex, Hudson & Union Counties. "Through this partnership, Bank of America's investment allows us to expand pathways to college and meaningful careers for the next generation of talent through our signature one-to-one mentoring model." Story Continues Bank of America's investment in BBBSEHU reflects its broader commitment to workforce development across the communities it serves. Working with organizations that prepare the next generation of skilled workers for success helps drive economic growth in New Jersey and beyond. "When young people have access to professional mentors and real career experiences, the impact reaches far beyond the individual," said Alberto Garofalo, president, Bank of America New Jersey. "Big Brothers Big Sisters of Essex, Hudson & Union Counties has built something that works: a direct connection between underserved youth and the skills, networks, and opportunities they need to build lasting economic security." Through this program, BBBSEHU aims to achieve a 90% high school graduation rate among participants, at least 70% enrollment rate in post-secondary education, including colleges, trade schools, and certificate programs, and attainment of paid internships, jobs, and workforce development programs. Mentored youth can go on to earn 15-20% more over their lifetimes than their non-mentored peers, translating to an estimated $1 billion in additional lifetime earnings for the youth BBBSEHU has served. Big Brothers Big Si

Do Compliance Risks and Rising Health Costs Signal a Strategic Turning Point for Bank of America (BAC)?

In late July and early August 2026, Bank of America disclosed potential monetary penalties tied to anti-money laundering deficiencies while also issuing a series of senior unsecured callable notes across maturities from 2027 to 2046, and enhancing its digital Travel Center platform for cardholders. At the same time, the bank highlighted that GLP-1 weight-loss drugs now account for roughly 13% of its more than US$2.00 billion annual employee healthcare spend, underscoring a growing focus on workforce wellness alongside rising compliance and funding demands. We'll now examine how the prospect of anti-money laundering penalties could interact with Bank of America's existing investment narrative. Capitalize on the AI infrastructure supercycle with our selection of the 55 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. Bank of America Investment Narrative Recap To own Bank of America, you need to be comfortable with a large, diversified bank whose story still hinges on disciplined credit risk, steady loan growth and ongoing efficiency gains. The fresh anti money laundering penalty overhang adds to existing litigation and regulatory risks, but does not clearly change the near term earnings drivers that analysts currently focus on. Among the latest announcements, the series of senior unsecured callable note issuances across maturities from 2027 to 2046 stands out, as it directly relates to how Bank of America funds itself while managing capital and liquidity. For investors watching catalysts tied to net interest income and balance sheet flexibility, these bond offerings sit alongside digital investments and buybacks as part of the broader capital allocation picture. Yet, despite these positives, the emerging compliance penalty risk is something investors should be aware of before they... Read the full narrative on Bank of America (it's free!) Bank of America's narrative projects $137.1 billion revenue and $38.0 billion earnings by 2029. This requires 6.4% yearly revenue growth and a $5.9 billion earnings increase from $32.1 billion today. Uncover how Bank of America's forecasts yield a $68.11 fair value, a 8% upside to its current price. Exploring Other PerspectivesBAC 1-Year Stock Price Chart Four members of the Simply Wall St Community currently see Bank of America's fair value between US$68.11 and US$90.21, highlighting wide differences in conviction. Against that backdrop, the potential for higher noninterest expenses from compliance and litigation could influence how you think about the bank's earnings resilience and whether those community estimates still feel reasonable. Story Continues Explore 4 other fair value estimates on Bank of America - why the stock might be worth as much as 43% more than the current price! Decide For Yourself Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your Bank of America research is our analysis highlighting 4 key rewards that could impact your investment decision. Our free Bank of America research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Bank of America's overall financial health at a glance. Curious About Other Options? These stocks are moving-our analysis flagged them today. Act fast before the price catches up: Uncover the next big thing with 20 elite penny stocks that balance risk and reward. The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these 16 smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement. The latest GPUs need a type of rare earth metal called Terbium and there are only 28 companies in the world exploring or producing it. Find the list for free. This

Data center operator Switch plans return to public markets via a $50bn IPO

Investing.com -- Switch Inc. has filed confidentially for a U.S. initial public offering that could take place as early as November, Bloomberg reported, citing people familiar with the matter. The Las Vegas-based data center operator is working with Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley on the potential listing, one of the people said. Switch could seek a valuation approaching $50 billion, including debt. The company has also been working on a funding round led by venture capital firm Andreessen Horowitz, which was reported in July to be targeting about $2 billion. Ben Horowitz, co-founder of Andreessen Horowitz, is expected to join Switch's board in a separate development. The timing, valuation and lineup of banks involved in the offering could still change as preparations continue. Representatives for Switch, Bank of America, Citigroup, JPMorgan and Morgan Stanley declined to comment. Andreessen Horowitz and Goldman Sachs did not respond to requests for comment. Switch operates data centers in Nevada, Michigan, Georgia and Texas, according to its website. The company is majority owned by DigitalBridge Group, which led an investor group alongside Australian infrastructure manager IFM Investors in acquiring Switch for $11 billion, including debt, in 2022. The planned listing comes as data center operators and their suppliers seek to tap investor demand for companies positioned to benefit from rising artificial intelligence infrastructure spending. Blackstone Digital Infrastructure Trust, a data center acquisition vehicle, raised $2 billion through an IPO in May. Brookfield-backed Csquare Inc. followed with a $1.21 billion offering in July. Switch's potential flotation would mark a return to public markets four years after its acquisition. It could also become one of the largest U.S. technology infrastructure listings of the year if the company achieves its reported valuation target. DigitalBridge agreed last year to be acquired by Japan's SoftBank Group. Related articles Data center operator Switch plans return to public markets via a $50bn IPO Nvidia's new Alpamayo project: What it means for Tesla? This sector is 'poised for a big, beautiful year': Truist View Comments

Data Center Firm Switch to File Confidentially for IPO

(Bloomberg) -- Switch Inc. filed confidentially for a US IPO, according to people familiar with the matter, joining its data center peers in tapping demand for exposure to the artificial intelligence theme. Most Read from Bloomberg OpenAI's New Device Will Be Hockey Puck-Sized and Cost Over $300 Iran Wants to Bar US, Israeli Ships From Hormuz in Peace Accord Trump Administration Considers Order on Autism and Vaccines Iran Says Agreement on Hormuz Shipping Reached With Oman Walmart Tests Fulfillment Cart Changes After Child Hit in Store The Las Vegas-based firm is working on a a listing that could take place as soon as in November, the people said. It's working with Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley on the offering, one of the people said. Separately, Ben Horowitz, co-founder of venture capital firm Andreessen Horowitz, is joining Switch's board, the people said, asking not to be identified as the information isn't public. Switch has been working on a funding round led by the firm, and could seek a valuation approaching $50 billion including debt, Bloomberg News reported in July. Details of the offering including the bank lineup and timing could still change, the people said. Representatives for Switch, Bank of America and JPMorgan declined to comment. Spokespeople for a16z, Citigroup, Goldman Sachs and Morgan Stanley didn't immediately respond to requests for comment. Switch, which is majority owned by DigitalBridge Group Inc., has data centers in Nevada, Michigan, Georgia and Texas, according to its website. The filing comes as data center owners as well as suppliers of equipment and services to the facilities are gathering cash this year through US first-time share sales. Blackstone Digital Infrastructure Trust Inc., a data-center acquisition vehicle, raised $2 billion in an IPO in May. Brookfield Corp.-backed Csquare Inc. raised $1.21 billion in an IPO last month. A group including DigitalBridge and Australian infrastructure manager IFM Investors Pty bought Switch in a 2022 deal valued at $11 billion including debt. DigitalBridge agreed last year to be acquired by SoftBank Group Corp. --With assistance from Dina Bass. Most Read from Bloomberg Businessweek How Apple and India Built an Alternative iPhone Production Hub Lululemon Is At War With Itself TikTok Withheld a Safety Feature From Millions. One Died by Suicide Armed With $10 Billion, Sequoia's Leaders Plan Its New Era RFK Jr.'s Cooking Show Is One Long, Boring Political Ad ©2026 Bloomberg L.P. View Comments

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