S&P 500 earnings growth has surged to eye-catching levels in Q2 2026, but a single company is responsible for much of that dramatic jump.
Alphabet (GOOGL), the parent company of Google, delivered an earnings surprise so large it has materially distorted the aggregate earnings picture for the entire index.
The blended earnings growth rate for the S&P 500 for Q2 2026 climbed to 37.9%, up sharply from 24.8% the prior week and 23.2% at the end of June.
Alphabet’s outsized positive EPS surprise was the single largest contributor to that increase, both for the week and since June 30.
The company reported GAAP EPS of $9.11 against analyst estimates of just $2.88, an extraordinary beat driven by a $98 billion gain recorded in the quarter.
That gain stems from mark-to-market accounting rules, which require companies to record unrealized equity gains and losses directly on their income statements.
Alphabet’s mark-to-market gain, tied significantly to its investment in SpaceX, added $8.96 to the S&P 500’s total EPS figure for Q2 2026 alone.
Strip Alphabet out of the numbers, and the Communication Services sector would be reporting a year-over-year earnings decline of 0.4% rather than the headline growth figure of 112.4%.
Without Alphabet, the blended earnings growth rate for the full S&P 500 would fall from 37.9% to 25.9%, still solid but far less dramatic.
The earnings surprise percentage for the index also deflates sharply without Alphabet, dropping from 39.3% to 12.6%, a figure far more consistent with historical norms.
Alphabet is not the only mega-cap tech company distorting the broader earnings picture this cycle, as Amazon and Meta have also contributed through investment gains and a tax-related item respectively.
GAAP accounting rules are forcing this small group of venture-heavy and investment-heavy companies to run large, non-operating items through their income statements, creating significant noise in market-wide earnings data.
Removing mark-to-market gains from the calculations reduces the S&P 500’s Q1 and Q2 year-over-year earnings growth rates from 19.0% and 35.8% to 10.6% and 22.3%, respectively.
Those adjusted figures paint a more measured picture of corporate America’s underlying health, one that is solid but considerably less spectacular than the headline numbers suggest.
Investors and analysts tracking S&P 500 earnings trends this season should weigh the index-level figures carefully, given how concentrated and non-recurring the distortions driving them actually are.
