Magnificent Seven 2026 Earnings View Rises to 18% as Others Slip

This article first appeared on GuruFocus.

Wall Street is still trying to pinpoint where artificial intelligence will actually show up in corporate earnings, and so far the answer appears narrower than the headlines might suggest. After the rollout of new AI models from Anthropic PBC and Altruist Corp., investors have been reassessing which parts of the market could translate productivity gains into measurable profit growth. Consensus estimates now point to 18% earnings growth in 2026 for the so-called Magnificent Seven including Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG) up from 14% following the tariff-related selloff in May. Over the same stretch, projected earnings growth for the other 493 companies in the S&P 500 has edged down to 11% from 12.5%, according to data compiled by Bloomberg Intelligence, reinforcing the view that AI-driven margin expansion may remain concentrated in technology for now.

The divergence becomes more apparent when stripping out tech. Without the technology sector, S&P 500 earnings would grow 7.7% this year, roughly half of the 14% expansion expected with tech included. The Information Technology sector itself is projected to grow earnings at 32% this year, compared with 7.7% for utilities and 11% for industrials in 2026, with those latter gains tied in part to capital spending associated with hyperscaler data-center buildouts. Analysts note that much of the lift in utilities and industrials is connected to spending by mega-cap technology firms rather than broad-based productivity gains from AI adoption. At the same time, Truist data show technology stocks have recorded the strongest positive earnings estimate revisions among the 11 sectors over the past four months, suggesting earnings momentum could remain skewed toward tech even as valuation and spending questions linger.

Market performance is beginning to reflect that tension. A Bloomberg gauge shows the Magnificent Seven down 7% so far this year, with Microsoft, Amazon and Apple among the largest drags on the broader benchmark despite their role in driving aggregate earnings growth. Nvidia (NASDAQ:NVDA), which has trailed the S&P 500 since the start of 2026, is scheduled to report earnings next week as investors weigh how profit trends compare with its significant capital commitments. Meanwhile, Citigroup Global Markets has highlighted small- and mid-cap AI enablers, where earnings revisions have risen 13% over the past nine months, slightly ahead of comparable large-cap peers at 12%. Companies such as Coherent, Pure Storage, nVent Electric and Lumentum the latter up 63% year to date along with Generac and Comfort Systems USA, are viewed as potential beneficiaries of the infrastructure spending underpinning AI. For now, the data suggest that while AI enthusiasm remains elevated, earnings acceleration is still concentrated in select areas rather than broadly distributed across corporate America.