The Q2 Scorecard Says 50% Earnings Growth. Take Out Two Companies And It Says 32%.

by Grace Whitaker · August 13, 2026

Earnings Editor, Earnings Dispatch

The second-quarter reporting season is effectively over for the large-cap index, and the summary statistic is arresting. As of its August 7 update, FactSet put the blended earnings growth rate for the S&P 500 in the second quarter of 2026 at 50.4%, with 88% of index constituents having reported. The blended rate combines actual results from companies that have reported with estimates for those that have not. At the end of the quarter, that same measure sat at 23.1%.

A doubling of the growth rate mid-season is not how earnings math normally behaves, and the reason is concentrated in two names. FactSet's own commentary makes the adjustment explicit: excluding Alphabet and Amazon.com, the report notes, "the blended earnings growth rate for the S&P 500 for Q2 2026 would fall to 32.0% from 50.4%." That is an 18.4 percentage point swing attributable to two constituents out of roughly 500.

The mechanism is a GAAP accounting outcome rather than an operating one, and it is worth spelling out because it is exactly the sort of thing that gets laundered into a clean-sounding headline. In an August 3 note, FactSet wrote that the GAAP "EPS actual for Amazon.com for Q2 2026 included non-operating, pre-tax other income of $53.4 billion, primarily from investments in Anthropic." Amazon's reported GAAP EPS of $5.75 landed against a $1.82 estimate. FactSet also noted that "Alphabet also reported an unusually large EPS surprise due to (GAAP) EPS that included a net gain of $98.0 billion primarily due to net unrealized gains on equity securities."

Those are unrealized marks on equity stakes, running through the income statement under current GAAP rules. They are not revenue, not operating income, and not cash. They also do not reverse quietly; if the marks move the other way in a future quarter, the same line that produced a 50% growth rate this season will produce the mirror image. Index-level earnings growth that leans this heavily on two companies' investment portfolios tells you very little about what the other 498 businesses did between April and June.

The distortion shows up just as starkly in the surprise statistics. FactSet's August 7 update put the aggregate earnings surprise at 29.2% above estimates. Excluding Alphabet and Amazon, that magnitude falls to 10.9%. The second number is still historically elevated, but it is a different category of result from the first, and it is the one that actually describes how broadly companies outperformed the sell side.

Underneath all of that, the operating picture is legitimately strong, which is the part the accounting noise risks obscuring in both directions. The blended revenue growth rate for the second quarter stood at 15.0% as of August 7, up from 12.2% at the end of the quarter and 14.2% a week earlier. Revenue is far harder to inflate with a mark-to-market gain than net income is, and a 15% top-line growth rate for a mega-cap index is a substantive number on its own terms.

Beat rates were similarly wide. FactSet reported that 86% of S&P 500 companies posted EPS above consensus, against a five-year average of 78% and a ten-year average of 76%. On the revenue line, 76% came in above estimates, versus a five-year average of 70% and a ten-year average of 68%. Revenue surprises averaged 3.2% above expectations. Those figures do not depend on Alphabet or Amazon to hold up.

Sector dispersion tells the more useful story about where the growth actually sat. Ten of eleven sectors were reporting year-over-year earnings growth, and FactSet noted that "Eight of these ten sectors are reporting double-digit growth, led by the Energy, Communication Services, Consumer Discretionary, Information Technology, and Materials sectors." The report does not attach individual growth rates to those five in the passage cited here. Health Care was the sole exception, and FactSet noted plainly that "the Health Care sector is the only sector reporting a year-over-year decline in earnings." Communication Services and Consumer Discretionary are also the sectors housing Alphabet and Amazon respectively, so their sector-level figures carry the same caveat as the index number.

The single-stock reactions during the final stretch of the season showed investors were still paying for demonstrated demand rather than for accounting artifacts. In Wednesday's August 12 session, per TheStreet's market coverage, CoreWeave gained roughly 18% to 21% after narrowing losses and meeting revenue expectations, Super Micro Computer rose about 9% on an earnings beat paired with a revenue miss and upbeat guidance, and Nebius Group climbed between 16.5% and 20.5% on revenue of $582.3 million against a $572.75 million estimate. Cava Group added around 16% on better-than-expected second-quarter results.

The macro backdrop supported the tone. July CPI, released Wednesday morning, rose 0.1% on a seasonally adjusted monthly basis with core CPI up 0.2%, both matching forecasts, leaving headline annual inflation at 3.4% and core at 2.5%. The S&P 500 closed Wednesday at 7,748.50, up about 0.3% and hovering near record levels, while the Nasdaq 100 finished at 29,742.60, up 0.5%, and the Dow Jones Industrial Average slipped 0.04% to 53,770.27.

Thursday's data came in on the same side of the ledger. The Bureau of Labor Statistics reported at 8:30 a.m. Eastern on August 13 that the July producer price index for final demand was unchanged on the month, against forecasts for an increase, with the 12-month unadjusted rate at 4.7%. The narrower measure excluding foods, energy and trade services rose 0.4% on the month and was also up 4.7% over 12 months, so the cooling was concentrated in goods rather than services. The Labor Department reported the same morning that seasonally adjusted initial claims for the week ended August 8 were 209,000, up 9,000 from the prior week's revised 200,000, with the four-week moving average at 199,000 and continuing claims for the week ended August 1 at 1,777,000. Thursday's US session is still trading as this is published, so no Thursday closing levels are available.

Valuation has not run away from the earnings, at least not on the forward measure. FactSet reported that "The forward 12-month P/E ratio is 20.0, which is above the 5-year average (19.9) and above the 10-year average (19.0)." That is a modest premium, and it rests on forward estimates that remain aggressive: as of the August 7 update, analysts were projecting earnings growth of 27.4% for the third quarter of 2026, 25.2% for the fourth quarter, and 30.0% for calendar 2026 as a whole. Those forward figures inherit the same base-effect complications, since the comparison quarters will eventually lap the periods containing the outsized investment gains.

The practical takeaway for anyone tracking this season is a reporting discipline rather than a market view. When a season scorecard cites a growth rate, the first question is whether it is a GAAP or non-GAAP aggregation and whether it includes non-operating investment gains. For the second quarter of 2026 the answer materially changes the number, from 50.4% to 32.0%, and the second figure is the one that describes what companies did operationally. Both are accurate. Only one of them is about the business cycle.