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S&P 500 Earnings Rise Despite Geopolitical Fears
23 Mar
Summary
- Forward S&P 500 EPS estimates are surprisingly increasing.
- Technology sector, particularly semiconductors, drives EPS growth.
- S&P 500 price action conflicts with rising earnings estimates.
In the wake of the Iran conflict, a surprising trend has emerged regarding S&P 500 earnings data. Approximately 5-6 weeks into the conflict, sell-side analysts are revising forward S&P 500 EPS estimates higher, a development that defies expectations given current stock price movements.
The rate of change for 2026 S&P 500 EPS estimates has accelerated in the past four weeks. This upward revision is largely propelled by the technology sector, with significant boosts to estimates for companies like Oracle and Micron Technology. These revisions are partly attributed to growth in memory components used in AI chips.
Meanwhile, the energy sector's earnings have only recently begun to see an increase, despite its shrinking weight in the S&P 500. The benchmark S&P 500 PE multiple is contracting as EPS estimates rise, primarily due to technology hardware growth. The S&P 500 is down 5% year-to-date, a performance that seems mild considering the geopolitical headlines, yet it conflicts with the positive earnings revisions.
