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With results from two-thirds of S&P 500 members already out, we can say with a high degree of confidence that the Q2 earnings season has been a good one, with the earnings and revenue growth pace showing acceleration and reassuring commentary and guidance for the current and coming periods.

Through Thursday, August 1^st, we have seen Q2 results from 343 S&P 500 members, or 68.6% of the index’s total membership. Total earnings for these companies are up +11.7% from the same period last year on +5.1% higher revenues, with 80.2% beating EPS estimates and 60.3% beating revenue estimates.

This is a better performance relative to what we have seen from this group of 343 index members in other recent periods. The one performance metric on which Q2 results track unfavorably to other recent reporting cycles is with respect to the revenue beats percentage, which has been tracking towards the lower end of the high-low range for the preceding 20-quarter period.

The market’s unfavorable reaction to the Tesla (TSLA - Free Report), Alphabet (GOOGL - Free Report), and Microsoft (MSFT - Free Report) results is not indicative of an enduring sentiment shift about these bellwether companies, but rather a function of unease about the ever-rising level of artificial intelligence (AI) centric capital spending by these companies, particularly Alphabet and Microsoft.

We feel strongly that investors will eventually realize that the current elevated investment cycle from Microsoft and Alphabet is essential to their long-term competitive positioning in the  AI space.

For more details about Q2 earnings season and the evolving earnings picture, please check out our weekly Earnings Trends report here >>>> Breaking Down the Q2 Earnings Season Scorecard

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