US earnings cycle no longer carried by Mag7 as profits spread across S&P 500

The US earnings cycle is no longer being carried only by the Magnificent 7, with profit upgrades now spreading across the broader S&P 500, according to a YES Securities market update. The brokerage said S&P 500 CY27 earnings per share estimates have risen to 407 in August 2026 from 334 in August 2025, a gain of nearly 22%. The six-month upward revision of 12.8% is among the strongest in the past decade, signalling improving profit visibility for US companies.

The shift is important because Wall Street’s rally over the last two years has been dominated by a narrow set of mega-cap technology names. YES Securities said the next phase of the earnings cycle could be driven more by breadth than concentration, helped by faster revenue growth, margin expansion and stronger participation from smaller companies.

Beyond mega caps


The Magnificent 7 are still delivering strong numbers, but earnings momentum is now spreading outside the group. YES Securities said CY27 consensus estimates are up 2% for the S&P 500, compared with 1.8% for the Magnificent 7. S&P 500 earnings growth for CY27 is estimated at 12%, while the Magnificent 7 is expected to grow only 4%.

The bigger surprise is coming from smaller companies. The Russell 2000 is expected to post 42% earnings growth in CY27 and 27% in CY28, ahead of both the S&P 500 and the Magnificent 7. This suggests investors may start looking beyond the biggest technology stocks if earnings upgrades continue to broaden.

The brokerage said upgrades are concentrated in information technology, real estate and energy. Downgrades are more visible in materials, industrials and communication services.

Among S&P 500 stocks, the largest CY27 earnings upgrades include Healthpeak Properties, EchoStar, Vivint Residential, Super Micro Computer, Marathon Petroleum, Intel and Valero Energy. The biggest downgrades include Trade Desk, Honeywell International, Coinbase Global, Builders FirstSource, Live Nation Entertainment, International Flavors & Fragrances, Mosaic, Norwegian Cruise Line, Zoetis and Dow.

Within the AI trade, YES Securities said hyperscalers are seeing stronger upward revisions than semiconductor and equipment names. Earnings estimates for hyperscalers such as Amazon, Alphabet, Meta and Oracle have been upgraded by 2.8%, compared with 1.3% for semiconductor names such as Nvidia, Micron, Broadcom and Applied Materials.

Revenue and margins lift profits

The broader earnings recovery is being helped by stronger sales and better operating leverage. S&P 500 quarterly revenue growth improved to 9% year-on-year in June 2026 from 4.1% in June 2025, showing better top-line momentum despite a higher base.

EBIT growth accelerated to 26.5% year-on-year in June 2026, while EBIT margins expanded by 241 basis points. Earnings growth reached 27.2%, helped by both revenue growth and margin expansion.

Mega-cap results were still strong in the latest quarter. Nvidia’s revenue rose 106% YoY, while earnings jumped 125.9%. Amazon’s revenue rose 19.6% and earnings surged 244.9%. Microsoft reported 17.7% revenue growth and 31.3% earnings growth. Alphabet’s earnings rose sharply, helped by a low base and strong operating performance.

Meta was the exception among large technology names, with earnings down 13.6% YoY and below estimates. Netflix also reported softer earnings growth compared with the AI-linked leaders.

The broader S&P 500 reported 9% revenue growth and 27.2% earnings growth in the latest quarter, according to the report. YES Securities said record CY27 EPS estimates, strong revisions, faster revenue growth and margin expansion point to an earnings recovery that is increasingly broadening beyond the Magnificent 7.

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