October 9, 2026, (Inside AI) — Wall Street is bracing for a third-quarter earnings season where artificial intelligence companies will again drive the bulk of profit growth, but the concentration of those gains is raising uncomfortable questions about how long the trend can hold.
Analysts expect S&P 500 earnings to rise roughly 31% year over year for the third quarter, according to Tajinder Dhillon, head of earnings and equity research at LSEG. Two-thirds of that increase will come from the technology sector and AI heavyweights Alphabet, Amazon.com and Meta Platforms.
The S&P 500 touched a record high this week ahead of the reporting period, which unofficially opens next week with results from banks including JPMorgan Chase and Goldman Sachs. Tech share gains powered much of that rally.
The numbers are striking. Energy earnings are seen climbing about 115% from a year ago, lifted by a roughly 30% jump in US oil prices during the quarter amid the ongoing US-Israeli war with Iran. Semiconductor companies, among the biggest beneficiaries of the AI buildout, are expected to post earnings growth of about 136%, down from about 158% in the second quarter.
"It's all AI and, to a lesser extent, energy and materials, but that's because of geopolitics," said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. "It wouldn't surprise me if 70-80% of the growth can be attributed to tech and AI."
Samana pointed to consumer staples and real estate, whose year-over-year earnings growth estimates for the quarter rank among the weakest, as evidence of how narrow the expansion has become.
The comparison to the second quarter is sobering. S&P 500 earnings grew nearly 54% year over year in that period, the highest since 2021, LSEG data showed. Excluding mark-to-market gains at Alphabet and Amazon.com on AI-related investments, growth was about 35%, still the strongest since 2021.
Strategists are not certain the third quarter can match that pace. Most companies tend to beat analyst estimates, and that pattern will likely repeat. But the trajectory of estimate revisions has begun to flatten.
"Earnings estimate revision momentum is starting to cool," said Nick Raich, CEO of The Earnings Scout, an independent research firm. "We're still going 100 miles an hour in the AI infrastructure buildout, but three months ago we were going 150 miles an hour."
Raich said recent reports, including from Micron Technology, have been strong and suggest other companies are still reaping the benefits. The chipmaker last month forecast quarterly revenue above estimates and said customers had increased commitments under its long-term supply agreements to $32 billion.
This week Google entered a massive power deal with Constellation Energy, a signal that the infrastructure demands of AI are reshaping energy markets as much as technology ones.
Can Capex Spending Keep Justifying The Hype?
The central tension for investors is whether the capital expenditure cycle underpinning the AI trade can sustain its current pace. Every quarter that spending continues, the bar rises higher.
"A concern for investors is we are kind of approaching peak earnings growth" for the current cycle, said Anthony Saglimbene, chief market strategist at Ameriprise Financial. "A lot of this AI trade is built on continued capex spending, and every quarter we go, and they continue to spend, the hurdle rates get higher and the scrutiny gets larger."
Interest rates add another layer of risk. US bond yields have risen on inflation concerns, higher oil prices and debt problems in France and elsewhere. Heavy borrowers such as utilities are particularly exposed, Samana said.
The concentration of earnings growth in a handful of AI-linked names echoes earlier market episodes. During the dot-com era, technology and telecom companies drove a similar share of index profits before the bubble burst in 2000. The difference now is that today's AI leaders generate substantial free cash flow and hold dominant positions in cloud computing, advertising and e-commerce.
Still, the dependence on a narrow group leaves little room for disappointment. Any sign that AI spending is decelerating, or that returns on those investments are falling short, could ripple through valuations quickly. For now, the market is betting the buildout continues. The third-quarter reports will offer the first hard evidence of whether that bet still holds.
