Earnings Broaden Beyond AI as the Median Stock Reaccelerates
factors
2026-06-30 08:02:00
Related:DHL H1 resultsMSCI AC Asia Pacific ex Japan (MXAPJ)MSCI EuropeMXAPJPrada (1913)RELX 1H results - 23 JulS&P 1500S&P 500S&P 500 (I.SPX)S&P 500 Q2 earnings - mid-JulSainsbury's Q1 sales - 30 JunGermanySouth KoreaUnited KingdomUnited StatesCommunication ServicesConsumer DiscretionaryFinancialsHealth CareIndustrialsInformation TechnologyBanksPharmaceuticals, Biotechnology & Life SciencesSemiconductors & Semiconductor EquipmentRegional BanksSemiconductor DesignAbbVie Inc (NYSE.ABBV)Deutsche Post AG (BE.DHL)EssilorLuxottica S. A. (PA.EL)Merck & Company Inc (NYSE.MRK)Micron Technology Inc (NASDAQ.MU)Nestlé S.A. (SW.NESN)NVIDIA Corporation (NASDAQ.NVDA)Reckitt Benckiser Group PLC (LSE.RKT)Relx PLC (LSE.REL)
The earnings recovery is broadening past the AI handful. Consensus expects S&P 500 Q2 EPS growth of 22% y/y, but the median S&P 1500 stock is now delivering double-digit growth with sales up ~7%.
Why it matters: Operating leverage off lean cost structures is the strongest since 2021. That widens the menu beyond Semis and hyperscalers.
S&P 500 quarterly EPS growth, y/y
+27%
+22%
+25%
+23%
+9%
The big picture
- ▸AI still carries the index: AI infrastructure names are expected to contribute nearly 60% of S&P 500 Q2 EPS growth, with Micron and NVIDIA together more than 40%.
- ▸Median set to surprise: Consensus has the median S&P 500 stock growing EPS just 9%, but conservative revenue estimates signal upside.
- ▸Semis momentum fading: Earnings-revisions breadth for Semis is against historical highs; hyperscaler weakness may lead a period of Semi underperformance.
- ▸Healthcare is the best non-AI broadening trade: Since the peace-day note, global bioprocessing is +14% and drug discovery +23%, with M&A momentum (Merck KGaA/Bio-Techne ~$11bn; ABBV/APGE).
- ▸Regional flavours: North Asia tech leadership persists (MXAPJ ~mid-teens 2H returns on 60%/22% 2026/27 earnings growth); Europe sees further upside led by cyclicals.
What's next: Q2 prints begin mid-July; watch DHL (Q2 EBIT €1.64bn vs €1.54bn cons), RELX (1H ~+7.5% organic, 23 Jul) and consumer staples updates.
Bottom line: Stay long the winners on earnings, but diversify into broadening plays — Discretionary, Transports, Regional Banks and Healthcare.