2026 Q1 Earnings Update
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Article Type
Market Updates
Topic
Opinion
Published
May 15, 2026
Read time
5 mins
Authors
Jordy Hermanns, CFA
Jacob Vijverberg, CFA
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Equity Markets At New Highs During Earnings Season

  • This week, many equity indices reached new highs.
  • The latest leg higher was fueled by renewed optimism following encouraging headlines out of Iran.
  • However, these new highs are not per se a direct consequence of those headlines: the “positive Iran scenario” largely returns to the initial starting point, if not worse.
  • The more durable driver of the records has been the same force underpinning markets for months: strength of corporate America, and specifically AI-related optimism.
  • Now that the Iran risks have diminished, the AI narrative can take the center stage again, allowing for new highs.

 

 

US Earnings Season Update: Big Tech, Big Earnings

  • The U.S. earnings season has moved past its peak, with roughly 75% of S&P 500 companies (market-cap weighted) having reported results.
  • Q1 2026 earnings were exceptionally strong, with year-over-year EPS growth of approximately +27%, significantly exceeding the initial consensus estimate of +12%.
  • Even when excluding for one-time distortions, S&P 500 EPS growth would is on pace to register 16% in Q1, the strongest quarterly growth rate since 2021.

 

 

S&P 500 Headline EPS (%, yoy)

Figure 1: S&P 500 EPS growth. Source: Aegon AM, Bloomberg. Data as per 05-2026.  

 

 

Big Tech Delivers Big Earnings

  • The big tech equity market stars are living up to their reputation.
  • In recent years the focus was mostly on the Magnificent 7 companies. More recently, the focus has shifted towards the so called hyperscalers – big tech companies that are providing the computing power that is driving the AI revolution.
  • The hyperscalers include Alphabet, Amazon, Meta and Microsoft – also part of the Magnificent 7 – and Oracle.
  • NVIDIA – the company with the highest market valuation – Apple and Tesla, members of the Magnificent 7 group, are not part of the hyperscalers classification.
  • Still, NVIDIA is seen as a pivotal AI-related stock, being a primary supplier to the hyperscalers, and there its NVIDIA’s earnings report on May 20th will be closely watched
  • EPS growth of the hyperscalers was very strong with a an (equal weighted) average of 53%.
  • Interestingly, hyperscaler earnings were lifted by an unusually large contribution from equity stakes in private companies, mostly driven by private holdings owned by Amazon and Alphabet. This quarter, more than 30% of the hyperscalers total net income can be attributed to the valuation increase of these investments.
  • This relates to private AI companies such as Anthropic, which have seen a very strong valuation boost in recent months – as we recently also described in this article. These valuation revisions feed through to their investors’ net income.
  • Still, even when corrected for the “other income” effects, hyperscalers’ EPS growth is very strong, and the S&P 500’s aggregate EPS growth stands at a 16%. 

 

 

2026 Q1 EPS growth (%, yoy)

Figure 2: 2026 Q1 EPS growth (%, yoy). Average is equal weighted. Source: Aegon AM, Bloomberg. Data as per 05-2026.  

 

 

European Earnings Season Update: – One story, two tales

  • The European earnings season is on its way, with approximately two thirds of the companies’ earnings in. Aggregate earnings growth stands at +6% (MSCI Europe).
  • Going into this season, the aggerate consensus expectations moved up – largely driven by upgrades in the commodity related space.
  • Q1 results are better than expected: initial forecasts anticipated decent growth (+3%), while actual EPS growth so far comes in more positive at +6%.
  • Growth remains concentrated, though this time with tech and energy driving the bulk of index earnings growth, rather than financials as in prior quarters.
  • We argue that Europe’s earnings are a one story, two tales case. The story is the Iran conflict and higher energy prices. For earnings, the positive tale is the strong growth in the commodity-related sectors whilst simultaneously the negative tale seen the (energy intensive) industrial and utilities sectors, with (worse than expected) negative growth.
  • Therefore – although European headline numbers are decent – these earnings are telling two different stories.
  • Compared to the US, Europe continues to lag in earnings momentum. The momentum in the US is driven by hyperscalers and the AI boom. Europe is simply lagging in this space and cannot jump on the earnings growth wave.
  • Still, some European companies are benefitting from the AI boom. E.g. ASML, ASMI and SAP have reported strong Q1 earnings of 20% or more, but their impact on the broad European index is less dominant.

 

MSCI Europe Headline EPS (%, yoy)

Figure 3: MSCI Europe EPS growth. Source: Aegon AM, Bloomberg. Data as per 05-2026.

 

 

A Different League

  • The divergence in earnings growth between the United States and Europe remains striking.
  • To put this into perspective, the combined expected adjusted net income of the large US hyperscalers is approximately USD 125 billion in Q1 alone—exceeding the total adjusted net income of all companies in the Euro Stoxx 50.
  • This stark contrast highlights a fundamental difference in corporate profitability. US companies, driven by scale, innovation, and technological leadership, operate at significantly higher profit levels. By comparison, Europe lacks comparable global technology champions, leaving the US operating in an entirely different league.

 

Profitability Comparison: A Different League

Figure 4: Comparison of (expected) Adjusted Net Income for Q1 2026 (in USD). Source: Aegon AM, Bloomberg. Data as per 05-2026.

 

 

Important information

Authors

Jordy Hermanns, CFA
Portfolio Manager
Jordy Hermanns, CFA, is a portfolio manager in the multi-asset group and serves as an investment strategist in the asset allocation team. Jordy is responsible for strategic and tactical asset allocation decisions on the asset allocation team.  
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Jacob Vijverberg, CFA
Asset Allocation Lead
Jacob Vijverberg, CFA, is the asset allocation lead for the multi-asset team, responsible for both strategic and tactical asset allocation, and co-portfolio manager of the Aegon Global Diversified Income Fund. He also provides macro-economic analysis to internal and external stakeholders.  
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