Why are U.S. earnings going higher? Simply, the impact of artificial intelligence (AI) on profit margins is significant. It’s expected to drive tech sector earnings in a material way. It is also impacting job growth in the sector and improving productivity.
We have heard the Iran war, if it persists in slowing supply chains, may pause data centre builds. Healthcare, with an aging demographic, is a natural growth area and for the most part, is the only part of the economy creating net new jobs in the past few years.
All sectors are expected contributors to earnings per share (EPS) growth in 2026, but it’s clear a 39 per cent growth rate in technology (32 per cent of index), 28 per cent in healthcare (9.4 per cent of index), and now 27 per cent in energy (3.87 per cent of index) are where the growth is coming from with marginal growth coming from other sectors and falling rates helping utilities and telecoms, that are more interest sensitive. Since the beginning of the year and since the war started, seven of 11 sectors are seeing earnings estimate declines, but they are all marginal.
What is interesting it that we are seeing better performance in market sectors excluding technology these days, which speaks to the fact that the sector was pricing in significant EPS growth last year before markets started to struggle on the geopolitical concerns.
