Earnings Season Shift: AI Stocks No Longer Dominant Force

Market Shifts in 2026

Generally, As the economy is holding steady now, A lot of companies are expected to contribute to market gains in 2026, While investors are exiting riskier AI bets.
Usually, You should expect tech stocks to still deliver significant earnings growth, But the landscape is set to change with analysts predicting a broader market performance.
Clearly, This means you will see a shift in the market, With more companies contributing to the growth.
Also, Investors are looking for safer bets, And are exiting the riskier AI stocks.

Earnings Growth Projections

Normally, The collective S&P 500 profits for the three months ending in December are expected to rise by around 7% from 2024 levels, With some projections suggesting an 11% growth rate.
Obviously, You can expect corporate guidance to be the most positive since 2021, With JPMorgan Chase and other major banks set to issue updates on the December quarter.
Probably, This will lead to a more positive outlook for the market, With investors feeling more confident.
Usually, The market is driven by earnings growth, And this year is expected to be no different.

Cyclicals Picking Up

Apparently, Growth outside of the tech sector is expected to increase, With analysts predicting a 9% rise in earnings for the Magnificent Seven cohort and 11% for other S&P 500 companies.
Naturally, You can expect optimism in cyclicals to pick up, Especially with tax refunds and stimulus talk before the midterms.
Generally, This will lead to a more positive outlook for the market, With investors feeling more confident.
Clearly, The market is shifting, And you should expect to see more growth outside of the tech sector.

Expectations for 2026

Obviously, The LSEG forecasts point to collective S&P 500 earnings for the whole of 2026 rising 15.5% from 2025 to around $313.81 a share, With stocks trading at 22.1 times the earnings expected over the next 12 months.
Usually, Experts predict that 2026 will be the year when weak players drop off the pull-up bar, And many AI impostors will be revealed, Making it challenging for investors to separate the wheat from the chaff.
Probably, This will lead to a more volatile market, With investors having to make tougher decisions.
Normally, You should expect the market to be driven by earnings growth, And this year is expected to be no different.

Market Trends

Generally, The market is already processing a separation between AI-related stocks with a clear path to profitability and those at greater risk of not being able to follow through.
Apparently, While tech will still be in the driver’s seat in terms of earnings and performance, The consensus expectations for the magnificent seven have been revised upward to show 20% earnings growth in the fourth quarter versus a year ago and then holding up at 19% in 2026.
Clearly, This means you will see a shift in the market, With more companies contributing to the growth.
Usually, The market is driven by earnings growth, And this year is expected to be no different.

Healthier Market Ahead

Normally, This suggests a healthier market heading into the new year, Especially now that the economic picture is improving.
Obviously, Growth is proving resilient, Inflation has yet to spike as a result of President Donald Trump’s tariff policies, And the labor market, while softening, has yet to worsen significantly.
Probably, This will lead to a more positive outlook for the market, With investors feeling more confident.
Generally, You can expect the market to be driven by earnings growth, And this year is expected to be no different.

Portfolio Managers Optimistic

Apparently, The Dow Jones Industrial Average and Dow Jones Transportation Average have both posted double-digit percentage gains over the past six months, Indicating a potential shift beyond tech in 2026.
Usually, A key principle of ‘Dow Theory’ is confirmation, Requiring the industrial and transportation averages to move in tandem, Which has historically led to S&P 500 gains of between 11% and 14% over the subsequent 12 months.
Clearly, Portfolio managers are also bullish, Predicting a broader market performance in 2026, With small- and mid-cap stocks performing better than tech.
Generally, This means you will see a shift in the market, With more companies contributing to the growth.

Unwinding of the Crowded Trade

Obviously, The crowded trade in tech has already started to unwind, And the average stock is expected to outperform the market, With real returns coming from outside the S&P 500.
Normally, You should expect the market to be driven by earnings growth, And this year is expected to be no different.
Probably, This will lead to a more volatile market, With investors having to make tougher decisions.
Usually, The market is shifting, And you should expect to see more growth outside of the tech sector.