S&P 500 Growth Rates Mask Hidden Dangers in Earnings Reports

The S&P 500's earnings per share (EPS) and revenue growth rates have been impressive, but some experts argue that focusing solely on EPS can be misleading. According to recent data, the S&P 500 EPS and revenue growth are up 51.1% and 15.2%, respectively.

However, it's worth noting that the last two quarters' EPS growth rates have been inflated by the Anthropic mark-ups. When excluding these mark-ups, the S&P 500 'operating' EPS growth rates for the same period are around 19-20% and 32.7%.

A closer look at longer-term revenue estimates reveals that Q2's almost-completed revenue growth is twice what was expected in January, reaching 15.2% from a projected 6.9%. This significant discrepancy highlights the importance of considering both EPS and revenue growth when evaluating market performance.

Amazon's latest earnings release was also affected by the Anthropic write-up, with operating EPS coming in at $0.86 compared to the expected $1.92. This represents a 55% miss on EPS expectations.