Positive signal amid US stock pullback: Over 75% of S&P 500 component stocks see profit growth, reaching a four-year high

The Wind Information APP notes that as the S&P 500 Index heads toward its worst week since October, U.S. stock investors still have a reason to cheer: the proportion of companies reporting quarterly profit growth has hit a new high in over four years.

Data shows that among the S&P 500 companies that have reported earnings, over 75% have achieved year-over-year profit growth. This is the highest proportion since Q3 2021.

These figures may ease market concerns that U.S. corporate profit growth is driven by only a few tech giants. The astonishing 310% rally of the so-called “Big Seven Tech Stocks” since the end of 2022 has raised fears that the U.S. stock market may be heading toward a bubble.

The proportion of profit growth among S&P 500 companies is the highest since 2021

This week, as investors questioned the returns on massive investments in artificial intelligence, tech stocks led the decline, intensifying these concerns. Due to worries about sectors considered vulnerable to AI disruption and the highly volatile precious metals prices, the S&P 500 fell 2%, likely posting its biggest weekly decline since October 10.

Meanwhile, confidence in broader sectors is strengthening. The equal-weighted S&P 500 index (which reduces the impact of tech stock volatility) has risen 3.5% this year, outperforming the market-cap weighted benchmark index.

The latest earnings season shows that sectors including industrials, consumer goods, and healthcare are now beginning to play their roles in driving index returns. Investors say this trend is expected to extend further.

Guy Miller, Chief Strategist at Zurich Insurance, said, “Growth is becoming more abundant, which means profits are also becoming more widespread. What we’re seeing is that you don’t necessarily have to invest in tech companies.”

In the non-tech sector, notable performers include General Motors, whose stock surged 9% after announcing strong profit prospects. Procter & Gamble, which produces a wide range of products from toilet paper and laundry detergent to skincare, also benefited from signs of a U.S. sales recovery.

Profit gap between large tech companies and other S&P 500 components is expected to narrow

Strategists including JPMorgan Chase and Goldman Sachs expect this trend of expanding profitability to continue over the coming months, supported by strong economic growth prospects, further boosting corporate profits.

Goldman Sachs strategist Ben Snyder wrote in a recent report, “The robust and accelerating economic growth pace in the first half of 2026 could create greater near-term benefits for small-cap and more cyclical stocks compared to the giants in the market.”

Analysts also forecast that the earnings gap between the top seven tech stocks in the S&P 500 and the remaining 493 companies will narrow for the rest of this year.

Data tracked shows that after a 28% profit surge last year, the “Big Seven” are expected to see an 18% profit growth in 2026. Meanwhile, profits for the rest of the index’s components are projected to accelerate from 8% in 2025 to 12% this year.