Say goodbye to the "tech stocks' dominance"! Over 75% of S&P 500 companies achieved profit growth, the highest since 2021

The S&P 500 component companies are experiencing the broadest earnings growth in over four years during this earnings season, providing some reassurance to U.S. stock investors who have experienced their worst weekly performance since October. This trend indicates that corporate earnings growth in the U.S. is moving away from reliance on a few tech giants.

According to data compiled by Bloomberg Industry Research, more than 75% of the S&P 500 companies that have reported earnings have achieved year-over-year profit growth. This is the highest proportion since Q3 2021.

This data may ease market concerns about excessive dependence on a few tech giants for U.S. corporate earnings growth. Since the end of 2022, the “Mag 7” stocks have surged by a cumulative 310%, raising fears of a bubble in the U.S. stock market. Tech stocks led the decline this week, as investors questioned the returns on massive investments in artificial intelligence, with the S&P 500 falling 2%, marking its worst weekly performance since October 10 of last year.

Non-Tech Sectors Begin to Gain Momentum

Meanwhile, broader sector strength is boosting market confidence. The equal-weighted S&P 500 index, which diminishes the influence of tech giants, has risen 3.5% this year, outperforming the market-cap-weighted benchmark index.

The latest earnings season shows that sectors such as industrials, consumer goods, and healthcare are beginning to play a role in driving index returns. Investors expect this trend to continue expanding.

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

Highlights from Non-Tech Sectors Include General Motors, whose stock rose 9% on strong profit prospects. Procter & Gamble also posted gains amid signs of a rebound in U.S. sales, with products ranging from toilet paper to detergents and skincare.

Strategists Expect the Trend to Continue

Strategists including those at JPMorgan and Goldman Sachs expect this profit diffusion trend to persist over the coming months, with strong economic growth prospects continuing to support corporate earnings.

“Robust and accelerating economic growth in the first half of 2026 has created a short-term tailwind for smaller and more cyclical stocks, surpassing the largest market-cap stocks,” wrote Goldman Sachs strategist Ben Snider in a recent report.

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

Bloomberg Industry Research data shows that the “Mag 7” is expected to see an 18% profit growth in 2026, below last year’s 28% increase. Meanwhile, earnings growth for the rest of the index components is projected to accelerate from 8% in 2025 to 12% this year.

Risk Warning and Disclaimer

        The market carries risks; investments should be made cautiously. This article does not constitute personal investment advice and does not consider individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Invest accordingly at your own risk.