Q2 2026 US earnings season preview: five questions investors are asking

1. Is the bar too high to clear for S&P 500 Q2 earnings?

According to FactSet, consensus estimates for S&P 500 second-quarter (Q2) 2026 earnings growth stood at 23.6% year-on-year (YoY) as of 10 July – the highest such estimate heading into a reporting season since Q3 2021's immediate post-pandemic recovery, and up from 18.8% at the start of the quarter. Revenue growth expectations have similarly risen, to 12.3% from 9.5% on 31 March.

Elevated expectations are not without precedent: Q1 2026 opened at a comparably demanding level, yet the index still delivered a 16.3% earnings surprise. FactSet's model – based on the average uplift in growth rates during past reporting seasons – points to actual Q2 growth closer to 29%, the strongest pace since Q4 2021's 32.0%.

Early results support that view: based on LSEG data, 89% of the 18 companies that had reported as of 14 July beat mean earnings per share (EPS) estimates, with an aggregate surprise of 13.3%. The more pertinent question may therefore be less about meeting consensus, and more about whether forward guidance signals this pace can hold into Q3 and beyond.

S&P 500 earnings growth estimates

2. Which sectors will lead Q2 earnings – and why is Health Care lagging?

Energy leads the sector-level growth table at 122.9% YoY, driven by a 45% increase in average WTI crude oil prices over the period. Information Technology, forecast to grow 63.3%, is likely to be the larger contributor in dollar terms given the sector's greater market weighting.

Health Care stands out as the only sector expected to post a YoY decline, of 9.0%, weighed down significantly by Gilead Sciences, which issued 2026 loss guidance to reflect $11.5 billion in acquisition and research and development (R&D) costs. Stripping out Gilead, the sector's growth would be 7.1% – still below the market median.

3. Is the Magnificent Seven still driving S&P 500 earnings growth?

Less so than in Q1. According to LSEG data, the Magnificent Seven (Mag7) group is expected to deliver blended earnings growth of around 28% YoY for Q2 – still ahead of the S&P 500 average, but a narrower gap than Q1's 63.2% versus 17.4% for the remaining 493 constituents. Meta and Amazon are the two notable laggards.

Contribution to index-level growth is broadening. Semiconductor names such as Broadcom (92%) and AMD (236%) are climbing the growth leaderboard, while energy majors Exxon Mobil (122%) and Chevron (195%) are also set to be outsized contributors, both benefiting from the oil-price spike discussed above.

4. Has the rotation out of tech into cyclicals got legs?

Sector returns since June point to a clear rotation. Information Technology, Communication Services and Consumer Discretionary – April-to-May's strongest performers – have all turned negative, while Health Care, Financials and Utilities, which lagged earlier in Q2, have improved or turned positive. Whether this rotation holds will depend on whether earnings season gives these sectors a fundamental reason to keep outperforming, rather than simply riding tech's pullback.

This earnings season is the test. Cyclical names face a lower bar than tech, and with oil prices now closer to pre-conflict levels, the worst of the cost-pressure story may be behind them. This quarter also captures the period when the Strait of Hormuz disruption was at its most acute, so guidance on revenue pipelines and demand resilience will matter more than the headline print, and could prompt a re-rating.

Tech faces the opposite dynamic. After an impressive rally, expectations remain elevated, and simply meeting the headline number is unlikely to be sufficient. Without a genuine upside surprise, investors may take profit instead – as seen in memory-chip stocks after Samsung's preliminary profit rose 19-fold YoY yet failed to sustain a rally.

S&P 500 sector market-cap-weighted average return (April – May 2026 vs. June – July 2026)

5. Where does S&P 500 valuation stand ahead of earnings?

The forward 12-month price-to-earnings (P/E) ratio for the S&P 500 stands at 20.0x, above the ten-year average of 19.1x. Unlike the Q1 earnings season, when a valuation correction in March offered a cushion for earnings beats, that cushion has largely closed; positive surprises will now need credible guidance to sustain current multiples.

There is also a notable shift in mega-cap tech valuations. Nvidia's forward P/E has fallen to its lowest level since 2019, now below both the broader index and defensive names such as UnitedHealth, despite a robust growth outlook. Earnings could prompt multiple expansion if growth holds, or downward revisions if forward guidance weakens.

Forward P/E: S&P 500 vs. Nvidia and UnitedHealth

The bottom line: room for cyclicals to catch up as Tech valuations cool

While 23.6% looks like a stretched bar, an extraordinary quarter for Energy and continued resilience from Tech should be enough to clear it. The gap between the Mag7 and the rest of the index is narrowing, and valuations within the group – Nvidia's in particular – have retreated significantly. That leaves room for the concentrated rally in Tech and Communication Services to broaden out: cyclical names have lagged this year's advance and carry modest expectations, so positive forward guidance could be the catalyst that lets them catch up.