Corporate America is enjoying the boom, but workers aren't seeing the same payoff. US after-tax corporate profits jumped 18.2% year over year in Q2, pushing companies' share of national income to a record high as profit margins hovered near historic peaks. Meanwhile, labor's share has fallen to some of its lowest levels ever, helping explain why public mood on the economy stays sour even as stocks climb.
- FactSet expects S&P 500 earnings per share to rise ~29% year over year in Q3, following Q2's ~50% jump.
- Goldman's Ben Snider sees AI infrastructure stocks driving more than half of Q3 earnings growth, with 10 names delivering two-thirds.
Profit split: The earnings boom looks even less impressive once you see where the gains are coming from. Nvidia and Micron alone are expected to account for more than a third of Q3 earnings growth. Even Q2's blockbuster results got a boost from one-time gains, including over $50B from Amazon's Anthropic stake and a similar lift for Alphabet. With Q3 earnings season kicking off, the question is whether profits can keep climbing without relying so heavily on a few AI giants.
