Deutsche Bank just raised its 2026 earnings projection for the S&P 500 to $358 per share, up from $342. The 2027 forecast jumped to $420 from $390. That means the bank is now expecting 28% earnings growth this year and 17% next year, betting that corporate America will keep crushing profit targets.
The timing matters. In the second quarter, 87% of S&P 500 companies beat earnings expectations, the highest share ever recorded. Aggregate profits landed 7% above estimates. Revenue hit a 25-year peak. Margins are on track to reach 15.7%, a record high. This isn't just a few tech giants carrying the load either. All 11 S&P 500 sectors are posting positive growth, with eight heading for double-digit gains. Megacap tech's contribution to overall returns has shrunk to 57% from 90% a year ago, which means the rally is finally spreading beyond the usual suspects.
Why the shift
Deutsche Bank pinpoints stronger economic activity, recovering manufacturing data, and ongoing spending on AI infrastructure as the drivers. The bank also noted that money continues to flow into tech stocks at historic pace, though now the benefits are rippling across more sectors. Sales momentum is real. Profit margins are expanding, not shrinking. That's the kind of earnings growth that sticks around.
The index itself has climbed nearly 10% already this year, trading around 7,489. Analysts across Wall Street are now piling on with their own upgrades. Most forecasts for 2026 EPS cluster between $340 and $350, with some calling for $390 or higher in 2027. The shift away from valuation expansion toward earnings-driven gains is significant because it suggests the rally has actual corporate performance behind it, not just investor euphoria about future prospects.
This article is informational only and should not be construed as financial advice. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.
