Strong earnings drive U.S. stocks to records as profits surge

Wall Street’s newest record run is being powered by profits, not just momentum. As first-quarter results roll in, S&P 500 companies are posting their fastest earnings growth since late 2021, a burst of strength that has helped push U.S. stocks to fresh highs even as many households remain uneasy about the economy.

FactSet said the blended year-over-year earnings growth rate for the S&P 500 stood at 27.1% in its May 1 update, with 63% of companies having reported and 84% of those beating analysts’ earnings-per-share estimates. If that growth rate holds, it would be the index’s strongest since the 32.0% pace in the fourth quarter of 2021. Analysts have also raised their projections for the next 12 months by more than 10% since the start of the year, suggesting investors are betting this is not just a one-quarter burst.

The market has already responded. The S&P 500 is up 6% for the year and has climbed more than 14% since March 30, recovering sharply after an early spring selloff. On May 5, the S&P 500 and Nasdaq both closed at record highs, helped by AI-related shares such as Intel and by a U.S.-Iran ceasefire that held firm. The next day, Wall Street opened higher again as investors looked for signs of a possible peace agreement and kept rewarding artificial intelligence exposure.

The earnings story has been strongest in technology, especially companies tied to AI infrastructure. Nvidia posted fiscal fourth-quarter revenue of $68.1 billion and fiscal 2026 revenue of $215.9 billion, numbers that underscore why chipmakers remain central to the market narrative. Bank of America data cited by market strategists showed first-quarter EPS beats tracking about 5% above consensus estimates, better than the 3% average going back to 2001. Bank of America Global Research also said three of the Magnificent 7 names that reported last week delivered especially large positive surprises.

That breadth may matter as much as the headline growth rate. Chris Fasciano of Commonwealth Financial Network said the market has shifted from reacting to what could go wrong to focusing on what has not gone wrong, while Deutsche Bank strategist Binky Chadha said earnings strength, excluding special factors, may be the strongest in two decades. The question now is whether that strength can spread beyond a handful of AI leaders and support margins more broadly.

Investors will get another test soon. Home Depot is scheduled to report its first-quarter 2026 results on May 19, and Nvidia is due on May 20. Walmart and Salesforce have already reported their latest fiscal 2026 results, giving Wall Street more proof that profits are still driving prices higher.