Wall Street typically lowers earnings forecasts as the year progresses. This cycle looks different, with S&P 500 earnings estimates for 2026 and 2027 rising more than 10% since tracking began.
Wall Street Usually Cuts Its Estimates. This Year, It’s Raising Them.
S&P 500 earnings estimates typically follow a familiar pattern. Analysts start with optimistic expectations for corporate profits. Then, as companies report actual results, analysts tend to lower those forecasts.
This year, however, the pattern looks very different.
S&P 500 earnings estimates for 2026 and 2027 have both risen more than 10% since tracking began. Instead of cutting estimates, analysts are raising them to keep pace with stronger-than-expected corporate results.
That shift stands out against two decades of history. It also provides an important look at the earnings growth supporting recent market returns.
S&P 500 earnings estimates for 2026 and 2027 have risen more than 10% since tracking began, contrasting with the historical pattern of downward revisions.
Why S&P 500 Earnings Estimates Usually Decline
Figure 1 tracks S&P 500 earnings estimates for each calendar year over the prior two years. For comparison, the starting point for each year is set to 100.
The gray dashed line shows the average path over the last 20 years. Historically, that line slopes steadily lower and finishes approximately 8% below where it began.
There is a straightforward reason for this pattern. Analysts begin tracking earnings well in advance. For example, analysts began tracking 2026 earnings estimates at the start of 2025.
As actual results and corporate guidance become available, analysts typically adjust their expectations. More often than not, those revisions move estimates lower.
Why S&P 500 Earnings Estimates Are Rising
This cycle is different.
The estimates for 2026 and 2027 have both increased more than 10% since tracking began. Rather than lowering forecasts, analysts have consistently raised them.
Strong corporate earnings are a key reason.
The S&P 500 is on track for its seventh consecutive quarter of double-digit earnings growth. In addition, more than 85% of S&P 500 companies have beaten their second-quarter earnings estimates. That is above the five-year average of 78%.
Technology has been a major contributor. Heavy investment in artificial intelligence continues to support sales and earnings growth.
However, the strength extends beyond technology.
Companies have continued to deliver strong results despite conflict in the Middle East, volatile oil prices, and lingering inflation.
How S&P 500 Earnings Estimates Support the Market Outlook
Strong stock market returns in recent years have been supported by actual earnings growth, not simply investor enthusiasm.
That distinction is important.
Market prices can respond quickly to headlines, sentiment, and changing expectations. Over longer periods, however, corporate earnings remain an important fundamental driver of stock prices.
Current forecasts suggest analysts expect earnings strength to continue. Estimates currently call for another year of double-digit earnings growth in 2027.
How Artificial Intelligence Could Influence Future Earnings
Artificial intelligence remains an important part of the earnings outlook.
The largest technology companies are expected to continue investing heavily in AI infrastructure. Meanwhile, analysts also see potential support from the broader economy.
Expectations include steady economic growth and potential productivity gains as more companies implement AI in their operations.
Together, those factors help explain why analysts are raising earnings estimates rather than following the historical pattern of lowering them.
Why Higher Earnings Expectations Matter for Investors
Higher earnings forecasts are encouraging. However, they also raise the bar for companies.
When expectations move this far above their historical pattern, companies have more to deliver. Current forecasts already assume a significant amount of good news.
As a result, companies may face greater pressure when results or future guidance fall short of expectations.
None of this guarantees a smooth path for markets. Volatility along the way remains part of investing.
What Investors Should Watch
The direction of earnings estimates will remain important in the months ahead.
Continued earnings growth could provide fundamental support for stock prices. At the same time, elevated expectations leave less room for disappointment.
Artificial intelligence spending will also remain an important factor. Investors will be watching whether continued investment translates into the sales, earnings, and productivity gains currently expected.
The broader economic environment matters as well. Steady economic growth could support corporate profits. However, inflation, oil prices, and geopolitical uncertainty remain important risks.
Key Takeaway
Wall Street usually lowers earnings estimates as the year progresses. This cycle has moved in the opposite direction.
Analysts have raised estimates for both 2026 and 2027 as corporate profits continue to exceed expectations. The S&P 500 is also on track for its seventh consecutive quarter of double-digit earnings growth.
Higher estimates create a higher bar for companies to meet. Still, recent market returns have been supported by real earnings growth.
For long-term investors, the central point remains straightforward: prices follow earnings, not headlines.
Frequently Asked Questions
Why does Wall Street usually lower earnings estimates?
Analysts often begin with optimistic forecasts and revise them as companies report actual results and provide updated guidance. Historically, estimates have tended to decline as the forecast period progresses.
Why are S&P 500 earnings estimates rising in 2026?
Corporate earnings have repeatedly exceeded expectations. As a result, analysts have raised forecasts to reflect stronger actual results.
How many S&P 500 companies are beating earnings estimates?
More than 85% of S&P 500 companies have beaten their second-quarter 2026 earnings estimates. That compares with a five-year average of 78%.
How is artificial intelligence affecting corporate earnings?
Heavy investment in artificial intelligence has supported sales and earnings growth within the technology sector. Expectations for continued AI infrastructure spending and potential productivity improvements also contribute to the earnings outlook.
What do higher earnings estimates mean for investors?
Rising earnings estimates can provide fundamental support for stock prices. However, higher expectations also create a higher bar for companies to meet and can increase sensitivity to disappointing results or guidance.
Important Disclosures
Investment Advisory Services offered through FAS Wealth Partners, a Registered Investment Adviser with the U.S. Securities & Exchange Commission. Registration does not imply a certain level of skill or training. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. FAS Wealth Partners’ articles and associated links offer news, commentary, and generalized research, not personalized investment advice. Nothing in this article should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and, unless otherwise stated, are not guaranteed. Securities may be offered through FAS Corp, an SEC registered broker-dealer and member of FINRA. FAS Corp is an affiliate of FAS Wealth Partners.
FAS Wealth Partners rises to No. 9 on the Kansas City Business Journal’s 2026 Investment Advisers List, moving into the Top 10 from No. 11 the prior year.
FAS Wealth Partners ranks No. 18 on the Kansas City Business Journal’s 2026 Registered Investment Advisers/Money Managers List, placing the firm among the 20 organizations featured in the publication’s print
Chart of the Month | August 2026
Wall Street Usually Cuts Its Estimates. This Year, It’s Raising Them.
S&P 500 earnings estimates typically follow a familiar pattern. Analysts start with optimistic expectations for corporate profits. Then, as companies report actual results, analysts tend to lower those forecasts.
This year, however, the pattern looks very different.
S&P 500 earnings estimates for 2026 and 2027 have both risen more than 10% since tracking began. Instead of cutting estimates, analysts are raising them to keep pace with stronger-than-expected corporate results.
That shift stands out against two decades of history. It also provides an important look at the earnings growth supporting recent market returns.
Why S&P 500 Earnings Estimates Usually Decline
Figure 1 tracks S&P 500 earnings estimates for each calendar year over the prior two years. For comparison, the starting point for each year is set to 100.
The gray dashed line shows the average path over the last 20 years. Historically, that line slopes steadily lower and finishes approximately 8% below where it began.
There is a straightforward reason for this pattern. Analysts begin tracking earnings well in advance. For example, analysts began tracking 2026 earnings estimates at the start of 2025.
As actual results and corporate guidance become available, analysts typically adjust their expectations. More often than not, those revisions move estimates lower.
Why S&P 500 Earnings Estimates Are Rising
This cycle is different.
The estimates for 2026 and 2027 have both increased more than 10% since tracking began. Rather than lowering forecasts, analysts have consistently raised them.
Strong corporate earnings are a key reason.
The S&P 500 is on track for its seventh consecutive quarter of double-digit earnings growth. In addition, more than 85% of S&P 500 companies have beaten their second-quarter earnings estimates. That is above the five-year average of 78%.
Technology has been a major contributor. Heavy investment in artificial intelligence continues to support sales and earnings growth.
However, the strength extends beyond technology.
Companies have continued to deliver strong results despite conflict in the Middle East, volatile oil prices, and lingering inflation.
How S&P 500 Earnings Estimates Support the Market Outlook
Strong stock market returns in recent years have been supported by actual earnings growth, not simply investor enthusiasm.
That distinction is important.
Market prices can respond quickly to headlines, sentiment, and changing expectations. Over longer periods, however, corporate earnings remain an important fundamental driver of stock prices.
Current forecasts suggest analysts expect earnings strength to continue. Estimates currently call for another year of double-digit earnings growth in 2027.
How Artificial Intelligence Could Influence Future Earnings
Artificial intelligence remains an important part of the earnings outlook.
The largest technology companies are expected to continue investing heavily in AI infrastructure. Meanwhile, analysts also see potential support from the broader economy.
Expectations include steady economic growth and potential productivity gains as more companies implement AI in their operations.
Together, those factors help explain why analysts are raising earnings estimates rather than following the historical pattern of lowering them.
Why Higher Earnings Expectations Matter for Investors
Higher earnings forecasts are encouraging. However, they also raise the bar for companies.
When expectations move this far above their historical pattern, companies have more to deliver. Current forecasts already assume a significant amount of good news.
As a result, companies may face greater pressure when results or future guidance fall short of expectations.
None of this guarantees a smooth path for markets. Volatility along the way remains part of investing.
What Investors Should Watch
The direction of earnings estimates will remain important in the months ahead.
Continued earnings growth could provide fundamental support for stock prices. At the same time, elevated expectations leave less room for disappointment.
Artificial intelligence spending will also remain an important factor. Investors will be watching whether continued investment translates into the sales, earnings, and productivity gains currently expected.
The broader economic environment matters as well. Steady economic growth could support corporate profits. However, inflation, oil prices, and geopolitical uncertainty remain important risks.
Key Takeaway
Wall Street usually lowers earnings estimates as the year progresses. This cycle has moved in the opposite direction.
Analysts have raised estimates for both 2026 and 2027 as corporate profits continue to exceed expectations. The S&P 500 is also on track for its seventh consecutive quarter of double-digit earnings growth.
Higher estimates create a higher bar for companies to meet. Still, recent market returns have been supported by real earnings growth.
For long-term investors, the central point remains straightforward: prices follow earnings, not headlines.
Frequently Asked Questions
Why does Wall Street usually lower earnings estimates?
Analysts often begin with optimistic forecasts and revise them as companies report actual results and provide updated guidance. Historically, estimates have tended to decline as the forecast period progresses.
Why are S&P 500 earnings estimates rising in 2026?
Corporate earnings have repeatedly exceeded expectations. As a result, analysts have raised forecasts to reflect stronger actual results.
How many S&P 500 companies are beating earnings estimates?
More than 85% of S&P 500 companies have beaten their second-quarter 2026 earnings estimates. That compares with a five-year average of 78%.
How is artificial intelligence affecting corporate earnings?
Heavy investment in artificial intelligence has supported sales and earnings growth within the technology sector. Expectations for continued AI infrastructure spending and potential productivity improvements also contribute to the earnings outlook.
What do higher earnings estimates mean for investors?
Rising earnings estimates can provide fundamental support for stock prices. However, higher expectations also create a higher bar for companies to meet and can increase sensitivity to disappointing results or guidance.
Important Disclosures
Investment Advisory Services offered through FAS Wealth Partners, a Registered Investment Adviser with the U.S. Securities & Exchange Commission. Registration does not imply a certain level of skill or training. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. FAS Wealth Partners’ articles and associated links offer news, commentary, and generalized research, not personalized investment advice. Nothing in this article should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and, unless otherwise stated, are not guaranteed. Securities may be offered through FAS Corp, an SEC registered broker-dealer and member of FINRA. FAS Corp is an affiliate of FAS Wealth Partners.
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