Wall Street’s upbeat earnings expectations set high bar for US companies

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Analysts expect an uptick in earnings from corporate America will make up for tech sector slowdown

US companies will have to deliver the biggest rise in profits in more than two years to avoid disappointing optimistic Wall Street analysts, setting a challenge for further stock market gains after a string of record highs. S&P 500 stocks are this month expected to report year-on-year earnings growth of almost 9 per cent in the three months to June, the biggest quarterly increase since early 2022, according to analysts’ forecasts compiled by FactSet.

Those gains have relied heavily on five giant companies — Nvidia, Apple, Microsoft, Amazon and Meta — whose price/earnings multiples have expanded far more rapidly to an average of 34 times forecasts, up from 28 times. Nvidia’s multiple has risen to 41 times from 24 times in January as forecasts for artificial intelligence-related chip demand have risen.

 

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