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Every week during earnings season, I put together an update for my colleagues at Ritholtz outlining how S&P 500 companies are reporting.
Are the numbers in-line with estimates? How have analysts revised their numbers throughout the quarter? What sectors are expected to report the highest and lowest earnings growth?
But this week, I want to bring you in on the update because the numbers are simply too good to keep solely in our research slack channel.
You ready?
Let’s do it.
1/ Q1 2026 Blended (Actuals + Estimates) Earnings Growth:
94% of S&P 500 companies have reported, so the figures in the following charts should be close to where actual earnings land by the end of Q1.
The numbers are unbelievable. Four sectors are on pace to grow earnings by over 39%.
Analysts expect 29% growth in overall S&P 500 earnings on a year-over-year basis.
And if you think it’s all buried in the Mag 7, think again. The chart below outlines the S&P 493’s earnings revisions throughout the Q1 earnings season.
Their numbers have been revised higher: from 10.5% on 4/17 to 17.8% through last Friday.
But forget the 493, let me strip tech out entirely for you and give you the net profit margins.
This one blew my face off.
Look at the trend since 2014 in S&P 500 (ex-Tech) net margins.
Analysts expect net margins to hit 13.4%. And again, the chart above does not include the tech sector.
Companies are getting really good at making money and I’m not making it up. The data is telling us this.
I’ve heard Josh say in the past that “you can’t fake revenue growth.”
Think on that for a second, because when I did it completely altered how I view the importance of top-line growth.
The further you go down the income statement, the more accounting games can be played to juice the earnings figure. But revenue? You can’t fake revenue growth.
That’s what I’m showing you below, the S&P 500’s blended (actuals + estimates) revenue growth for all 11 S&P 500 sectors.
Every single sector is expected to report a year-over-year increase in revenue.
The S&P 500 (overall) is expected to increase revenue by 11.4% from a year ago.
Q1 earnings have been yet another reminder to not underestimate Corporate America.
Nvidia Has a Size Problem
This chart is a few weeks old, but I wanted to elevate it for you all because the point being made, in my opinion, deserves attention. Also, credit to Michael for originally bringing this idea to me.
Nvidia is simply too big to trade at a premium valuation.
I’ll show you what I mean in the scatter below:
The X axis is different hypothetical forward PE’s for Nvidia
The Y axis is different market caps of Nvidia based on the various Forward PE’s
And lastly, the bubble size represents the % market cap weighting of Nvidia in the S&P 500 based on these different valuation scenarios.
Currently, Nvidia trades at a 25x forward P/E (8.5% of the index).
If it traded at a 35x forward P/E it would represent 11.9% of the index. That would be more than the entire Industrials Sector.
See the problem?
That’s all for today. Thank you so much for reading and I hope everyone has a great weekend.