The US is gearing up for another quarter of bumper corporate earnings spurred by lavish spending on the AI build-out. Reporting season kicks off next week, with S&P 500 earnings forecast to have risen 27 per cent in the September quarter from a year earlier, according to Goldman Sachs. That would mark the third consecutive quarter in which earnings growth has exceeded 25 per cent — an unprecedented run outside of the recovery from financial crises, according to Manish Kabra, chief US equity strategist at Société Générale.
Revenue growth is forecast to hit 12 per cent. Investors are witnessing “the best earnings and margin growth in our lifetime” thanks largely to capital expenditure on the AI build-out, said Steve Chiavarone, chief investment officer for equities at Federated Hermes. US stocks closed at a record high on Tuesday, having largely shrugged off a sell-off in the Treasury market that began in mid-August and accelerated after the Federal Reserve last month raised interest rates for the first time in three years.
Some market watchers expect the good times to keep on rolling. “Neither recent macroeconomic data nor signals relating to the AI investment boom point to a slowdown,” said Ben Snider, Goldman Sachs’ chief US equity strategist. US energy companies are expected to post bumper profits thanks to the spiralling energy prices triggered by the closure of the Strait of Hormuz. But the bulk of the market’s earnings growth is again set to come from Big Tech, analysts say. Chip group Micron last week gave a preview of things to come when it reported net income of $37.7bn, up from $3.2bn a year before.
Source: Financial Times Companies · Summarized by HeadlinesBriefing