AI Fuels Goldman Sachs' Bullish S&P 500 Earnings Outlook

Goldman Sachs predicts another strong earnings season for the S&P 500, driven by artificial intelligence investment. According to a recent report led by strategist Ben Snider, consensus forecasts call for S&P 500 earnings per share to rise 27% from a year earlier in the third quarter.

This growth rate masks an unusually concentrated earnings picture, with information technology and energy expected to generate nearly 80% of the S&P 500's earnings growth for the quarter. AI infrastructure companies are expected to account for more than half of S&P 500 EPS growth, with Micron Technology (MU) and Nvidia (NVDA) together accounting for over one-third.

However, the median S&P 500 company is expected to experience slower earnings growth, at 9%, down from 14% in the second quarter. Revenue growth for the median company is also expected to slow to 6% from 7%, and margins could face pressure.