S&P 500 Earnings Growth Hits Rare Milestone, Echoing 1994 and 1999

The S&P 500 is expected to see earnings per share (EPS) growth of 24%-32% this year, marking only the third time in modern history that such rapid growth has occurred. The previous instances were in 1994 and 1999.

In 1994, despite a slight decline in the S&P 500 index due to Fed Chair Alan Greenspan's rate hikes, EPS jumped by 39.8%. This was driven by trends such as the beginning of the internet boom, which fueled demand for chips, software, and telecom hardware.

Fast-forwarding to 1999, the S&P 500 earnings were up 27.7%, with established tech companies like Microsoft, IBM, and Intel benefiting from start-up demand. However, this year's growth is more closely aligned with 1999 due to its AI-driven momentum.

Nvidia, for example, is expected to grow EPS by 95% this year, driven by soaring demand for its chips in AI infrastructure. Amazon's EPS is set to rise by 79%, benefiting from a massive one-time equity gain on Anthropic and reaccelerating cloud business growth.