- Rising AI investment gains boosted S&P 500 second-quarter earnings by 52% year-on-year
- Technology sector profits increased 74%, driven by gains at Alphabet and Amazon
- Amazon’s Q2 included $53.4 billion income linked to its Anthropic investment
Rising paper gains from investments in artificial intelligence companies significantly boosted the S&P 500's second-quarter earnings. The technology sector's 74% profit increase is driving the overall index's estimated 52% year-on-year growth in Q2 earnings.
The results were boosted by significant mark-to-market gains at Alphabet and Amazon, reflecting the rising value of their investments and equity holdings linked to the AI boom, according to a Reuters report.
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According to Tajinder Dhillon, head of earnings analysis at LSEG, Amazon's second-quarter 2026 results included $53.4 billion in non-operating pre-tax other income, largely linked to its investment in Anthropic. Alphabet, meanwhile, reported an unrealised gain of $77.1 billion on equity securities.
Excluding these gains, the latest estimate for S&P 500 second-quarter profit growth would be 33%, according to Dhillon. Even so, that would still mark the strongest quarter for earnings growth since 2021.
The gap highlights why some investors remain cautious about mark-to-market gains, which can reverse if the value of the underlying investments falls.
"Mark-to-market gains can turn into losses just as fast," BofA Securities equities and quant analyst Savita Subramanian said in a recent client letter. "We are not arguing mark-to-market gains are bad, though we remain cautious that increasing earnings dependence on (largely) uncontrollable factors reduces visibility."
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Goldman Sachs strategists said this month that AI infrastructure stocks accounted for almost one-third of the growth in S&P 500 earnings per share during the second quarter.
The strong earnings season has also led analysts to raise their expectations for the third quarter. Analysts now expect S&P 500 companies to post profit growth of 29.2%, up from 27.6% at the beginning of July, with positive outlooks significantly outnumbering negative ones.
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