Far exceeding expectations! The just concluded financial reporting season for US stocks was "amazingly strong".

U.S. Corporate Profit Is Surging to Rarely Seen Levels in the Past 20 Years, Beating Wall Street Expectations According to Bloomberg industry research data on May 8th, the S&P 500 index's first-quarter earnings surged by 27% year-on-year, exceeding analysts' previous expectations by over one and a half times, surpassing the fastest growth rate since 2004 excluding the major economic impact recovery period. The first-quarter profits of the "Big Seven" tech companies are expected to jump by 57%, confirming the profitability of AI investments. Geopolitical tensions were originally seen as the biggest risk to drag down U.S. stocks, but strong financial reports this earnings season have dispelled market concerns, and economic resilience has alleviated worries about global growth slowdown. Exceeding expectations by the largest margin in over a decade The first-quarter earnings season in the United States has been the best in 20 years, catching Wall Street off guard with its strong performance. According to Bloomberg industry research data, the S&P 500 companies have exceeded analysts' expectations by the largest margin since 2013, excluding the period of the COVID-19 pandemic. Charles-Henry Monchau, Chief Investment Officer at Banque Syz, said: I can't remember a time when there was such a stark difference between sell-side consensus expectations and actual earnings. He had originally bet on outperforming overseas markets at the beginning of the year, but with the escalation of the Iran situation and the evolution of the AI trend, he tactically shifted his positions back to U.S. stocks, pointing out that the European region "may not be the winner of this war". US Bank in Minneapolis had forecast that earnings per share for the S&P 500 index in 2026 would reach $305. According to Robert Haworth, Senior Investment Strategy Director at the bank's wealth management department, the strong performance in the first quarter forced the bank to raise its full-year earnings forecast and year-end S&P 500 target price. He bluntly stated: Our expectations were clearly too low. Leading by the "Big Seven," the entire industry is turning around Tech giants continue to be the main driver of earnings growth in this round. According to Bloomberg industry research compiled data, the profits of the "Big Seven" consisting of NVIDIA, Microsoft, Alphabet, Amazon, Meta, Apple, and Tesla are expected to increase by 57% year-on-year in the first quarter. During the same period, earnings for the remaining 493 S&P 500 companies are expected to rise by about 17%. (This week, the performance of the Big Seven tech companies far exceeds the rest of the 493 S&P component stocks) Thomas Martin, senior portfolio manager at Globalt Investments, is relatively optimistic about the future. He said: I can't recall a period of such sustained earnings growth, with full-year earnings per share expected to maintain double-digit growth through 2026, with AI driving growth for quite some time. Wendy Soong, stock strategy analyst at Bloomberg industry research, pointed out: The market is catching up with the valuation of future earnings potential of AI-related companies, and although the Iran war has caused supply chain disruptions, it has also attracted funds flowing into U.S. assets under the guise of risk diversification. What is even more noteworthy is that strength has spread throughout the entire market. According to a recent report by strategists at Deutsche Bank, all 11 sectors of the S&P 500 have seen positive growth, the first time in four years. Even sectors like consumer cyclicals, telecommunications, and healthcare, which were previously dragged down by tariff concerns and low consumer sentiment, have returned to growth. Deutsche Bank subsequently raised its earnings per share forecast for 2026 by nearly 7% to $342. Max Kettner, Chief Multi-Asset Strategist at HSBC, said: For U.S. stocks, especially large-cap stocks, as well as credit and the entire risk asset market, macroeconomic activity and earnings fundamentals are truly important, and oil price trends and geopolitical tensions may be more critical for interest rates and foreign exchange markets. Can the growth be sustained, hidden concerns remain Strong profits have not eliminated all risks, and multiple hazards still hang over the market. The continued disturbances from the Iran conflict are affecting energy prices, with the S&P 500 index rebounding by more than 16% from its March low, technical indicators show that the index has been lingering in overbought territory since mid-April, and short-term pullback pressure cannot be ignored. The recent sharp rise in semiconductor stocks has also raised concerns. According to Goldman Sachs data, hedge funds' underweighting of North American stocks relative to global stock benchmarks has reached historic lows. John Cunnison, Chief Investment Officer at Baker Boyer Bank, warned that maintaining the current momentum in earnings growth requires the cooperation of consumer spending and confidence. He said: Consumer confidence is hovering at historic lows, and this prosperity needs to benefit ordinary consumers, not just the wealthy, and broader profit growth beyond the tech industry, otherwise U.S. stocks maintaining record highs in the coming months will face pressure. This article was translated from Wall Street See by GMTEight Editor: Chen Yufeng.