S&P 500 earnings season is shaping up better than expected, with results so far pointing to solid underlying momentum. As of early February 2026, roughly 64% of index constituents have reported fourth-quarter results. With more than half the season complete, blended year-over-year EPS growth is tracking around 13–13.5%, a meaningful step up from the roughly 8–9% growth expected when earnings season began. Revenue growth has been running in the high single digits, near 9%, supported by strength in technology and cyclical sectors.
Beats versus expectations remain broadly favorable. About three-quarters of reporting companies have exceeded EPS estimates, slightly below the strongest historical periods but still clearly skewed to the upside. The average earnings surprise is running close to 9% above consensus, stronger than both five- and ten-year averages. Revenue beats have been less robust, with roughly the mid-60% range of companies topping sales expectations, but still consistent with healthy top-line growth overall.
Sector performance highlights a familiar theme: technology, communication services, and select industrials are driving the bulk of earnings growth. Demand tied to AI investment, cloud infrastructure, and data centers continues to be a major tailwind. Cyclical industrial companies, particularly those linked to electrical equipment and data-center infrastructure, are pointing to strong backlogs and sustained order visibility. By contrast, some consumer and rate-sensitive areas are showing softer revenue trends, though disciplined cost control is helping protect margins and earnings.
Looking ahead, the outlook remains constructive but more nuanced. Blended EPS growth for the quarter now sits near 13%, and consensus forecasts call for mid-teens earnings growth in 2026. Management commentary remains optimistic around AI-related demand, while caution persists around macro factors such as Fed policy, labor market cooling, and the risk of margin pressure if pricing power weakens.
For investors and analysts, the key takeaway is the growing tension between earnings strength and valuation. With the S&P 500 trading near a forward P/E of roughly 22x, upside will increasingly depend on sustained earnings revisions rather than multiple expansion. The remainder of earnings season, particularly guidance from large index heavyweights, will be critical in shaping expectations for 2026 growth and determining how much room the market has for disappointment.
Disclosure
This material is provided by Gryphon Financial Partners, LLC (“Gryphon”) for informational purposes only. It is not intended as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, though Gryphon cannot guarantee their accuracy or completeness. Gryphon does not provide tax, accounting, or legal advice. Individuals should seek such guidance from qualified professionals based on their specific circumstances.