S&P 500 Q2 Earnings: Stripping Out The Outsized Impact Of Alphabet And Micron

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The picture emerging from Q2 earnings is one of broad-based strength. Companies are comfortably beating consensus estimates—even as those forecasts were revised upward leading into the reporting cycle—while the overall pace of earnings growth continues to accelerate noticeably.

Through Thursday, July 23, we have received Q2 results from 121 S&P 500 members (representing 24.2% of the total index). Total earnings for these early reporters are up +72.1% year-over-year on +13.0% higher revenues, with 86.8% topping EPS estimates and 80.2% beating revenue estimates.

This performance represents a marked improvement for these 121 index members compared to their performance in recent quarters. The charts below illustrate how these Q2 EPS and revenue beat rates compare to both recent periods and historical averages.

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The Q2 earnings growth pace has been boosted by the blockbuster quarterly numbers from Alphabet (GOOGL - Free Report) and Micron Technology (MU - Free Report). Alphabet's Q2 earnings increased +297.9% from the same period last year, with unrealized gain on the company's minority stake in SpaceX (SPCX - Free Report) bosting the numbers. Micron's Q2 earnings were up +1350.1%, given the red hot demand for the company's memory products in the emerging AI world. 

Excluding the contribution from Alphabet and Micron, Q2 earnings for the rest of the companies that have reported already would be up +17.6% (vs. +72.1% otherwise) on +9.4% higher revenues (vs. +13% otherwise). 

The comparison charts below present the Q2 earnings growth pace relative other recent periods. The left hand chart shows the aggregate earnings growth picture for the 121 companies that have reported across recent quarters, while right-hand chart shows the earnings data excluding Micron and Alphabet. 

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Any way you look at it, this is an impressive earnings picture and represents a market-friendly set up, notwithstanding headwinds from the geopolitical side.