Andreea Ion and James Galbin reviewed second-quarter earnings and identified unexpectedly strong corporate results. FactSet reported that about 81% of S&P 500 companies beat analysts' revenue forecasts in Q2, a rate above recent five- and ten-year averages. The FactSet sample covered roughly 90% of firms that had reported by early August. Heavy spending on artificial intelligence and Big Tech strength supported earnings growth. Elevated US tariffs were noted as a downside risk, but the tech- and AI-driven momentum largely offset tariff pressure across the aggregate results.
"I think the biggest surprise was actually how strong the reports were," Ion said, citing data from financial data platform FactSet that 81% of companies in the S&P 500 beat analysts' revenue forecasts in Q2.
"On one hand, you have the boom in artificial intelligence that companies are pouring money into left, right, and center," he said. "But then on the other hand, you've got US tariffs that are at their highest since the Great Depression and are slowly but surely making themselves felt in the economy."
FactSet's report was issued in early August and was based on 90% of S&P 500 firms that announced results at that time. It found that the proportion of those surpassing Wall Street expectations for earnings per share and revenue was above both the five-year average of 78% and the 10-year average of 75% for earnings per share, per FactSet.
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