Aptus Musings: Q1 2026 Earnings Recap

by | May 19, 2026 | Blog, Market Updates

The #1 question that I’ve been getting: Why is the S&P 500 Rallying?

 As I’ve said, simply put, there’s a profitability boom.

    • “Boom” in EPS beats: 85% of S&P 500 firms beating EPS – the best hit rate in 5 years;
    • “Boom” in Margins: 64% of sectors have seen margin expansion over the past three months;
    • “Boom” in Growth: 73% of sectors are now expected to post double-digit EPS growth;
    • “Boom” in Momentum: Forward EPS expectations are up by 8%, Revenues up by 4%;
    • “Booming” AI demand: Hyperscalers saw EPS and revenue beats.

‘Nough said.

This is my favorite chart of the week:

 

 

Q1 2026 Earnings Recap

 

This past earnings season (hopefully) silenced the naysayers because growth was everywhere. It was the strongest earnings season since 2021 and the first time in four years that all 11 GICS sectors are showing positive revenue growth. Let’s start with a recap:

    • Corporate earnings estimates are performing significantly better than the historical norm. While analysts typically cut expectations by 1% to 3% each quarter, the current season has seen the S&P 500 estimates rise by nearly 4%, with MidCaps up 1% and Small Caps holding steady.
    • Nearly every sector has had positive earnings revisions since April 1 (beginning of earnings season), with only utilities and staples slightly lower. Although driven by energy and tech, the breadth of better-than-typical earnings revisions is noteworthy.
    • The breadth of positive EPS revisions over the past three months has been mostly positive since July 2025, an exceptionally broad positive trend, which highlights the increasing broad economic impact of AI spending, the OBBBA, and likely the recovery of cyclical industries.
    • Large, mid, and small cap indices are on pace now for 15%+ year-over-year (“YoY”) earnings growth, which is generally typical only in early stages of economic recoveries; however, in this case, we believe it is consistent with a Fed willing to let the nominal economy “run hot” so far.

 

Data as of 05.14.2026

 

 So why was earnings season so strong?

Growth is being propelled by a mix of structural and cyclical tailwinds: tax perks, a tightening labor market, and AI finally hitting the bottom line. We’re also seeing a boost from 2025’s delayed capital projects, a shift toward rebuilding inventories, and a six-year streak of aggressive spending by high-income earners despite rising commodity costs.

 

 

The Magnificent 7 (“Mag 7”) is currently outperforming expectations with accelerating sales, though a deceleration is projected for late 2026. Meanwhile, for the first time in four years, the rest of the market has stabilized, returning to the high-single-digit revenue growth typical of the pre-2022 era.

 

Source: Raymond James as of 05.14.2026

 

AI investment is shifting corporate strategy from share buybacks to aggressive capex. Hyperscalers are now funneling 100% of their cash flow into infrastructure, with Mag 7 group buybacks already down 64%. We forecast this trend to continue through 2026, with S&P 500 capex growth (+33%) significantly overshadowing buybacks (+3%) before growth likely begins to decelerate in 2027. We wonder what the ramifications will be for EPS.

 

Data as of 05.14.2026

 

While many of our clients fear we’re reliving the 2000 dot-com bubble, the data tells a different story. Unlike a true bubble driven by hype, today’s price growth is supported by a 13% increase in earnings, while the NTM P/E has actually contracted by 5% this year.

 

 

Essentially, the market is rising because companies are more profitable, not because valuations are getting stretched. Between these fundamentals and the geopolitical caution surrounding the Iran War, the market appears disciplined rather than overextended.

As always, please reach out if you would like any commentary on any company’s earnings report.

 

 

Disclosures

 

Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward looking statements cannot be guaranteed.

This commentary offers generalized research, not personalized investment advice. It is for informational purposes only and does not constitute a complete description of our investment services or performance. Nothing in this commentary should be interpreted to state or imply that past results are an indication of future investment returns. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with an investment & tax professional before implementing any investment strategy. Investing involves risk. Principal loss is possible.

Advisory services are offered through Aptus Capital Advisors, LLC, a Registered Investment Adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about the advisor, its investment strategies and objectives, is included in the firm’s Form ADV Part 2, which can be obtained, at no charge, by calling (251) 517-7198. Aptus Capital Advisors, LLC is headquartered in Fairhope, Alabama. ACA-2605-16.

Explore the Aptus Blog

Advisory services offered through Aptus Capital Advisors, LLC, a Registered Investment Adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level or skill or training. More information about the advisor, its investment strategies and objectives, is included in the firm’s Form ADV Part 2, which can be obtained, at no charge, by calling (251) 517-7198.

Aptus Capital Advisors, LLC is headquartered in Fairhope, Alabama.

The opinions expressed herein are those of Aptus Capital Advisors (“Aptus”) and/or the individual Aptus Employee being interviewed as of the date of publication and are subject to change without notice. Aptus reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs and there is no guarantee that such assessments of investments will be accurate. There is no guarantee that strategies or recommendations will equal or exceed any expectations or goals discussed. The discussions, outlook, and viewpoints featured are not intended to be investment advice and do not take into account specific client investment objectives.

The opinions expressed herein are those of Aptus Capital Advisors (“Aptus”) and are subject to change without notice.

Aptus social media posts, including third party material, are provided for information purposes only and should not be considered investment advice or recommendation to purchase or sell any particular security, product or service. Aptus posts are based on data obtained from sources believed to be reliable but are not guaranteed as being accurate and do not purport to be a complete summary of the available data. Past performance is no guarantee of future results.

Aptus does not endorse or take responsibility for any content, advertising, products, advice, opinions, recommendations, or other materials posted by followers or other third parties on Aptus’ social media sites. Any comments or opinions posted by another user should be attributed to that user and not Aptus.

Aptus is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Aptus including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available at www.aptuscapitaladvisors.com or by calling 251.517.7198.

Enhancing Outcomes

Your job is to help clients meet their goals. Part of that is capturing the compounding power of markets, part is making sure the path matches client expectations. How portfolios get from point A to point B matters.