Corporate earnings for companies listed on the S&P 500 are forecast to rise sharply in 2026, extending a rare streak of strong profit expansion, according to new projections released by the London Stock Exchange Group (LSEG).
Analysts tracked by LSEG estimate that S&P 500 earnings will climb by 15.5% in 2026, reaching approximately $314 per share. If realised, the increase would mark the third consecutive year of double-digit earnings growth, a level of consistency not recorded in more than 20 years.
The outlook follows a volatile period for global equities. LSEG noted that stock markets endured one of their steepest pullbacks since the Global Financial Crisis during the previous year, largely due to uncertainty around tariffs and trade policy. However, easing trade tensions, renewed enthusiasm around artificial intelligence, and resilient corporate balance sheets helped markets rebound strongly, delivering a third straight year of double-digit equity returns.
LSEG highlighted the historical significance of the trend, noting that if the S&P 500 records another year of double-digit returns in 2026, it would become only the fourth instance in the past 125 years in which the index has achieved four consecutive years of such gains. The previous occurrences were in the 1940s, 1950s, and 1990s.
Looking ahead, the group said market fundamentals remain broadly supportive. Earnings resilience is expected to extend beyond the so-called “Magnificent Seven” mega-cap technology stocks, while profit margins remain close to record highs. LSEG also pointed to potential operating leverage gains as AI adoption improves productivity and lowers costs across sectors. In addition, futures markets are pricing in two to three interest rate cuts by the US Federal Reserve this year, which could further underpin valuations.
Revenue growth is projected to reach 7.0%, marking a multi-year high. Combined with strong earnings momentum, LSEG said 2026 could rank among the strongest years for corporate performance in the past decade.
Earnings growth is expected to be unusually broad-based. All 11 S&P 500 sectors are forecast to record positive earnings growth, a phenomenon observed only twice in the past 25 years. Eight sectors are projected to accelerate earnings growth compared with last year, while nine sectors are expected to post faster revenue growth.
Importantly, LSEG said early indicators suggest that earnings expansion is no longer being driven overwhelmingly by a small group of technology stocks. In 2025, the Magnificent Seven accounted for 38% of net earnings growth, a figure expected to ease to 35% this year.
Excluding the Information Technology sector, seven industries are projected to contribute more to total earnings growth than they did a year earlier, pointing to stronger participation from the broader S&P-493.
Among notable sector developments, Energy is expected to emerge from an earnings recession and return to growth for the first time in three years, led by the Oil & Gas Refining & Marketing segment.
Consumer Staples earnings are forecast to grow 7.4%, the fastest pace in five years. Meanwhile, Consumer Discretionary earnings are expected to rise 11.5%, narrowing the gap with Staples to the smallest level since 2019.
Industrials are set for a third consecutive year of earnings expansion, with profits projected to jump 15.5%, double last year’s pace, supported by increased capital expenditure and manufacturing activity.
Despite broader sector participation, Aerospace & Defense and Semiconductors continue to dominate earnings growth. Aerospace & Defense earnings are forecast to surge 52.1% this year, following a 62.2% gain last year — the strongest two-year growth profile of any industry.
Semiconductors and Semiconductor Equipment are projected to post 61.1% earnings growth, following 43.7% growth the previous year.
Metals & Mining also join the high-growth group, with earnings expected to rise 34.9%, building on last year’s 29.5% increase amid stronger gold, copper, platinum, and silver prices. Silver alone surged 146% in 2025, pushing the gold-to-silver ratio to a 13-year low.
Several turnaround stories are also emerging. Automobiles are projected to rebound from a 23.4% earnings decline last year to 21.8% growth, while Independent Power and Renewable Electricity Producers are expected to swing from -12.0% to +35.2%.
Given the Magnificent Seven’s 36% weighting in the S&P 500, LSEG extended its analysis to the group, noting that their combined earnings are expected to grow 23.4%, around 800 basis points above the broader index.
Excluding the Magnificent Seven, the remaining S&P-493 is forecast to deliver 13.2% earnings growth, the strongest since 2021. Revenue growth for the group is projected at 5.7%, continuing a steady improvement from 5.3% last year, 4.0% in 2024, and 1.5% in 2023.
Within the Magnificent Seven, Nvidia stands out. The company is one of only three S&P 500 constituents expected to achieve at least 50% growth in both revenue and earnings in 2026, earning its place in what LSEG calls the “50/50 Club.”
Nvidia alone is expected to contribute 3.2 percentage points to total index earnings growth, exceeding the combined contribution of the rest of the Magnificent Seven, which stands at 2.2 points. When Nvidia is excluded, the Magnificent Seven’s contribution to earnings growth falls sharply from 35% to 18%, underscoring concentration risks.
These risks are reflected in valuations. The Magnificent Seven trade at a forward four-quarter P/E of 29.9x, compared with 22.5x for the broader index and 20.0x for the S&P-493. On a price-to-sales basis, the group trades at 8.2x, versus 3.0x for the index and 2.1x excluding the group.
LSEG cautioned that beyond macroeconomic risks, a key uncertainty lies in investor tolerance for AI-related capital spending and whether hyperscale technology firms are over-investing ahead of clear returns. With valuations approaching levels last seen during the dot-com era, volatility around earnings and AI adoption.
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