S&P 500 Earnings Surge by 50.4% in Q2 Amid AI Boom

The S&P 500 is expected to grow earnings by 50.4% in Q2, its fastest pace since Q2 2021. This surge is driven by the AI boom and soaring demand for chips.

Historically, when the S&P 500 grows earnings this fast, it's usually rebounding from a previous decline. However, this time, earnings were already at record levels before the current year.

The AI infrastructure build-out is driving profits higher, with chip companies like Micron seeing net income surge over 10 times in its fiscal third quarter, reaching $28.2 billion in GAAP net income. This accounts for roughly 4% of the S&P 500's growth in Q2.

The period from 1994 is seen as an analog to the current AI-driven infrastructure boom. That year, internet infrastructure demand began ramping higher, and demand for products from companies like Cisco and Intel took off, with S&P 500 earnings per share jumping 40%.