S&P 500 EPS and Revenue Growth Rates Soar, But Analysts Warn of Potential Inflation

The S&P 500's EPS and revenue growth rates have been strong in Q2 '26, but some analysts are cautioning that the numbers may be inflated by recent Anthropic mark-ups. The EPS growth rate for Q2 '26 was up 51.1%, while revenue growth was up 15.2%. However, after adjusting for the Anthropic mark-ups, EPS growth rates for the last two quarters were around 19-20% and 32.7%, respectively.

Looking at longer-term revenue estimates, Q2 '26's y-o-y revenue growth rate was estimated to be 6.9% on January 2nd '26, but it ended up being twice that at 15.2%. This strong revenue growth is a positive sign for the market, especially considering that it has been driven by companies like Amazon and Alphabet.

Amazon's earnings report was heavily affected by the Anthropic write-up, with the company missing on EPS by 55% due to the mark-up. However, its AWS business continued to perform well, growing revenue 37% y-o-y. The operating margin for AWS rose 640 basis points year-over-year in the quarter just reported.

Looking ahead, Q1 '27 quarterly expected S&P 500 EPS growth was reduced from 21.4% on April 24th '26 to 12.1% on May 1 '26, but it is now rising again to 17.7%. Q2 '27 expected quarterly EPS growth was cut from 20% to 1%, down from 5 weeks ago.