By Saqib Iqbal Ahmed
NEW YORK (Reuters) -With more than half of second quarter earnings reported and stocks near record highs, company results have reassured investors about the artificial intelligence trade that has energized Wall Street, even if tariff worries curtailed buying.
With results in from 297 of the S&P 500 companies as of Thursday, year-on-year earnings growth for the second quarter is now estimated at 9.8%, up from 5.8% estimated growth on July 1, according to LSEG data.
Next week investors will get a peek at earnings from Dow Jones Industrial Average constituents Disney, McDonald’s and Caterpillar, for a look at the broader economy. Strong profit reports for these companies could propel the Dow, trading just shy of its December record high, to a fresh peak.
Some 81% of the companies have beaten analyst expectations on earnings, above the 76% average for the past four quarters.
“The earnings season has been unambiguously better than expected,” Art Hogan, chief market strategist at B. Riley Wealth in Boston, said.
The strength of corporate earnings is particularly reassuring for investors after the pummeling sentiment took in the prior quarter due to the twin threats of tariffs and worries over flagging economic growth.
“The first quarter was a bit more mixed and you had some questionable economic data … which I think gave the market some pause,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“But the second quarter seems to have just been a turnaround,” Ghriskey said.
The strength of results for names linked to the artificial intelligence trade – the investment thesis that AI will be a transformative force, driving a significant portion of future economic growth and company profits – is particularly heartening, investors and analysts said.
“Overall it has been mega caps, growth/technology/AI that is driving a lot of the results,” Ghriskey said.
“This is where we want to be exposed in terms of companies … we’re at maximum equity exposures and we’re comfortable there.”
Having boosted the market for several quarters, the trade ran into rough waters at the start of the year as the emergence of Chinese-founded artificial intelligence startup DeepSeek rattled investors, stoking concerns over heightened competition that could disrupt the dominance of established tech giants at the heart of the AI trade, including Nvidia.
Strong results from Microsoft and Meta Platforms reassured investors that massive bets on AI are paying off.
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
