S&P 500 Q1 earnings growth accelerates sharply, with TECH+ still the core driver

Overview

This report is UBS's interim tracking of the S&P 500's 1Q26 earnings season. It focuses on revenue, margins, earnings, buybacks, and EPS growth, as well as the magnitude of earnings and revenue beats versus expectations. The core conclusion is that 1Q26 earnings growth has accelerated meaningfully, with TECH+, especially large-cap tech, still the main source of growth; overall earnings beats are strong, but sector divergence is pronounced.

Core views

UBS believes this earnings season shows strong S&P 500 earnings momentum, with revenue growth, margin improvement, and earnings beats all supporting EPS growth. TECH+ retains a very pronounced growth lead, with Big 6 TECH+ expected EPS growth reaching 61.2%, far above the 11.1% expected for the S&P 500 excluding TECH+. At the same time, Materials and Financials are strong, while Energy is flat and Health Care and Telcos are negative, indicating that the index's strength is not evenly distributed.

Analysis framework

The report uses an earnings-season dashboard approach, blending reported actuals with consensus estimates for unreported companies. It breaks out revenue, margins, earnings, buybacks, and year-over-year EPS growth across the S&P 500 and major sector groups, and combines this with revenue and earnings beat data to observe post-release price reactions.

Methodology notes

• Earnings season trackingHybrid framework of actuals and consensus estimates

  Reported companies use actual results, while unreported companies use consensus estimates to form a rolling estimate for the current earnings season.

  This method is suitable for measuring the current growth path of the index and sectors in the middle of earnings season, but the final result will still change as subsequent reports and estimate revisions come through.

• Beat/miss analysisRevenue and earnings beat/miss classification

  Revenue beats/misses use a +/-0.25% threshold, while earnings beats/misses use a +/-1.0% threshold.

  The report uses this framework to compare stock price performance when EPS and revenue both beat, only one beats, or both miss, with a one-day window before and after the release date.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• S&P 500

  Core tracking object of the report

  Strengths

  Revenue is expected to grow 11.2% y/y, EPS is expected to grow 28.4% y/y, and reported companies' earnings are beating expectations by 17.3% overall.

  Weaknesses

  The index's growth structure is uneven, with some sectors contributing little or negatively.

  Comparison

  Overall EPS growth is below TECH+ and Materials, but above S&P 500 ex-TECH+.

  Risks

  Earnings expectations may change with subsequent reports and estimate revisions, and price reactions are also influenced by rates and risk premium.

• TECH+

  Primary driver of earnings growth

  Strengths

  EPS is expected to grow 59.6%, with a strong earnings beat and a generally favorable price reaction.

  Weaknesses

  Growth is highly concentrated and heavily dependent on a few large companies.

  Comparison

  It is significantly ahead of the S&P 500's overall 28.4% EPS growth expectation.

  Risks

  If guidance or margins from large-cap tech firms disappoint later, the index's earnings momentum could weaken.

• Big 6 TECH+

  Core contributors within TECH+

  Strengths

  EPS is expected to grow 61.2%, clearly above the rest of the market.

  Weaknesses

  Expectations and actual growth vary widely across individual stocks.

  Comparison

  It has a clear advantage versus the 17.9% EPS growth expected for the rest of the market.

  Risks

  High growth expectations raise the bar for delivery.

• Financials

  Important sector group

  Strengths

  EPS is expected to grow 24.7%, all 76 of 76 companies have reported, and the earnings beat is 6.4%.

  Weaknesses

  The earnings beat magnitude is below the S&P 500 overall 17.3%.

  Comparison

  It is stronger than Non-Cyclicals and Energy, but weaker than TECH+ and Materials.

  Risks

  Financial stocks remain sensitive to changes in rates, credit cycles, and risk appetite.

• Materials

  High-growth sector group

  Strengths

  EPS is expected to grow 42.2%, with strong contributions from revenue, margins, and earnings.

  Weaknesses

  It has strong cyclical characteristics and is sensitive to macro conditions and commodity prices.

  Comparison

  Its expected EPS growth is second only to TECH+-related groupings and is ahead of the S&P 500 overall.

  Risks

  Changes in demand, prices, and costs could affect margin sustainability.

• Energy

  Earnings drag

  Strengths

  Reported companies are beating earnings expectations by 18.9%.

  Weaknesses

  EPS is expected to grow 0.0%, with negative contributions from margins and buybacks.

  Comparison

  It is clearly weaker than the S&P 500 overall and most high-growth sector groups.

  Risks

  Changes in energy prices, margins, and capital returns may continue to weigh on sector performance.

Key data

• S&P 500 reported share84.0% of market cap; 456/500 companiesAs of the report date, most of the S&P 500's market cap and company count had reported 1Q26 results.
• S&P 500 revenue growth expectation11.2%Expected year-over-year revenue growth for 1Q26.
• S&P 500 EPS growth expectation28.4%Current consensus estimate; if historical earnings-season revision trends are followed, the final reported growth rate is expected to be 28.6%.
• S&P 500 earnings beat magnitude17.3%The magnitude by which reported companies' earnings are above expectations overall.
• Share of companies beating earnings78%The share of companies that have beaten expectations so far.
• TECH+ EPS growth59.6%Significantly above the S&P 500 overall growth rate.
• Big 6 TECH+ EPS growth61.2%Large-cap tech companies are expected to outperform the rest of the market by a wide margin.
• Financials EPS growth24.7%Financials growth is strong, but below the S&P 500 overall EPS growth rate.
• Energy EPS growth0.0%Energy is viewed in the report as a drag on 1Q earnings.
• Companies reporting over the next five trading days12 companies, representing 9.9% of S&P 500 market capIncluding Applied Materials, Home Depot, Keysight Tech, and NVIDIA.

Impact & implications

From an investment perspective, the 1Q26 earnings season reinforces the earnings resilience of large-cap U.S. equities and the earnings advantage of technology-weighted stocks, but it also suggests that index-level performance may be highly dependent on a handful of high-growth sectors. If TECH+ continues to deliver high growth, S&P 500 earnings expectations may be supported; if subsequent reports or estimate revisions soften, the currently elevated earnings growth expectations and the market's ability to absorb valuations could come under pressure.

Risks

• The report's view may change as subsequent company reports, estimate revisions, and macro variables evolve.
• S&P 500 earnings growth is highly dependent on TECH+ and large-cap tech, increasing concentration risk.
• Changes in interest rates, risk premia, the business cycle, and investor risk appetite could affect equity returns.
• Weaker earnings growth in Energy, Health Care, and Telcos may limit market breadth.
• The post-release price reaction window is short and does not represent medium- to long-term investment returns.

What to watch

• The earnings releases of the 12 companies due over the next five trading days, especially NVIDIA, Applied Materials, Home Depot, and Keysight Tech.
• Whether final S&P 500 EPS growth is revised up from the current 28.4% to the expected final reported growth rate of 28.6%.
• Whether TECH+ and Big 6 TECH+ can continue to deliver high growth and margin improvement.
• Whether the historical pattern of price reactions to revenue beats and earnings beats continues.
• Whether earnings pressure in Energy, Health Care, and Telcos spreads to broader sectors.