Goldman Sees Q3 Earnings Boom, But Can AI Giants Keep It Up?
The Q3 earnings season is approaching with high expectations, and Goldman Sachs' Chief US equity strategist Ben Snider thinks it can deliver. With consensus looking for a 27% year-over-year S&P 500 EPS growth rate, this would be the strongest setup since 2021.
While this growth rate is slower than the 33% pace seen in Q2, it's still a strong indicator of the market's performance. Snider believes that companies will continue to beat expectations, driven by AI investment and hyperscaler capital expenditures. The latter is expected to rise 116% year-over-year in Q3.
The real test for these AI giants, however, is whether they can monetize their spending. Goldman expects cloud revenue growth to accelerate from 48% in Q2 to 55% in Q3. If this happens, it could be a sign that the market is shifting towards more sustainable growth.