S&P 500 Earnings Projected to Grow by 15.5% in 2026 -LSEG
S&P 500 earnings are projected to grow 15.5% in 2026 to $314 per share, according to analyst estimates, marking a third consecutive year of double-digit growth, a feat not seen in two decades, the London Stock Exchange Group, a leading global financial markets infrastructure, said in its outlook for the year.
The group highlighted that equities endured one of the sharpest drawdowns since the Great Financial Crisis last year amid tariff uncertainty, only to rebound and deliver a third consecutive year of double-digit returns as trade tensions eased and optimism shifted towards Artificial Intelligence and resilient corporate earnings.
“If the S&P 500 delivers another year of double-digit returns in 2026, it would mark only the fourth time in the past 125 years that the index has achieved four consecutive years of double-digit gains – with previous occurrences in the 1940s, 1950s, and 1990s”, the report added.
LSEG stated that looking ahead to 2026, fundamentals remain supportive, driven by resilient earnings, which are expected to broaden outside of Magnificent-7, profit margins near all-time highs, potential operating leverage improvement as AI adoption drives productivity and cost efficiencies, and Fed Funds futures are pricing in two to three rate cuts this year.
Revenues are expected to rise 7.0%, reaching a multi-year high. Taken together, 2026 is expected to be one of the strongest years in the past decade.
Earnings breadth remains strong, with every sector expected to post positive earnings growth, a rarity seen only twice in the past 25 years. Momentum is also solid, as eight of the eleven sectors are projected to accelerate earnings growth versus last year, and nine are expected to deliver higher revenue growth.
Perhaps most importantly, we’re seeing early signs of earnings growth broadening beyond the Mag-7, which have dominated results in recent years. In 2025, the Mag-7 contributed 38% of net earnings growth, which is expected to decline to 35% this year.
More notably, excluding Information Technology, seven sectors are each projected to contribute more to overall earnings growth than they did last year, signaling broader earnings participation from the S&P-493.
Specific examples include Energy, which is expected to exit its earnings recession and post growth for the first time in three years, led by the Oil & Gas Refining & Marketing sub-industry.
Consumer Staples is another, expected to grow earnings by 7.4%, its fastest pace in five years. Consumer Discretionary, which typically posts stronger earnings growth than Staples due to Amazon’s large weighting, is forecasted to grow 11.5% – roughly 400 basis points higher than Staples and, notably, marking the smallest gap between the two sectors since 2019.
Industrials are set for a third straight year of earnings growth, up 15.5%, doubling last year’s pace, driven by stronger capex and manufacturing tailwinds.
While rotation is evident in some sectors, two groups continue to dominate: Aerospace & Defense and Semiconductors. Aerospace & Defense is expected to grow earnings by 52.1% this year, following 62.2% last year, marking the strongest two-year combination of any industry.
Semiconductors and Semiconductor Equipment rank next, with expected earnings to rise 61.1% this year, following 43.7% growth last year.
Metals & Mining also join this high-growth cohort with earnings growth of 34.9% this year, following 29.5% last year as it benefits from stronger gold, copper, platinum, and silver prices.
Silver surged 146% in 2025 and the gold-to-silver ratio is now at a 13-year low. Turnaround stories include Automobiles, rebounding from a 23.4% decline last year to a rise of 21.8% this year, along with Independent Power and Renewable Electricity Producers, swinging from -12.0% last year to +35.2% this year.
“We extend our earnings analysis to the Mag-7, given their concentration in the S&P 500 with a 36.0% market cap weight. The group is expected to grow earnings by 23.4%, 800 basis points higher than the overall index.
“When excluding Mag-7, the S&P-493 growth rate is 13.2%, the highest since 2021. Just as encouraging, S&P 493 revenue growth is projected at 5.7% this year, surpassing last year’s 5.3%, 4.0% in 2024, and 1.5% in 2023, signaling a clear trend of broadening strength.
“Within the Mag-7, Nvidia dominates the group and is placed in the coveted “50/50 Club”. Nvidia is only one of three companies in the S&P 500 that are expected to grow both revenue and earnings by at least 50% in 2026.
“Nvidia will contribute 3.2 percentage points to the overall index’s net earnings growth rate – more than the rest of the Mag-7 combined, which adds just 2.2 points”, LSEG said it the report.
Put differently, the report stated that when excluding Nvidia, the Mag-7’s earnings growth contribution falls in half from 35% to 18%. This concentration risk is reflected in valuations, where the Mag-7 continues to command a significant premium to the broader index.
Justifiably, the group offers both higher earnings and revenue growth while generating double the margins of the index. The forward four-quarter P/E for the group is 29.9x compared to 22.5x for the index. When excluding the Mag-7, the S&P-493 P/E is 20.0x.
LSEG said on a price-to-sales basis, the Mag-7 trades at 8.2x compared to 3.0x for the index, which falls to 2.1x when excluding the group.
The report acknowledged that a key risk outside of the macro risks highlighted lies in investor patience with AI’s return on investment and whether hyperscale’s are over-investing for uncertain payoffs. With valuations near levels last seen during the internet bubble, volatility around earnings and AI enablers could dictate equity price trajectories in the near term.
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