View from the Observation Deck

Today’s post provides an update to 2025 and 2026 earnings and revenue growth rate estimates for the S&P 500 Index (“Index”) and each of its eleven sectors. The Index closed at 6,838 on 2/23/26, below its all-time high of 6,979 (1/27/26), and up a staggering 38.7% (total return) from its most recent low of 4,983 (4/8/25). For comparison, from 1928-2025 (98 years) the Index posted an average annual total return of 9.8%.

Earnings growth rate estimates marched higher for both 2025 and 2026 since our last post on this topic.

The Index’s year-over-year (y-o-y) earnings growth rate estimates were observed at 13.3% and 13.7% in 2025 and 2026, respectively, on 2/23/26. Estimates for both years have increased since our last post when they stood at 11.2% (2025) and 12.8% (2026). Click here to view that post. Just two sectors are estimated to see earnings decline y-o-y in 2025: Energy (-8.3%) and Consumer Staples (-1.7%). In 2026, however, earnings are estimated to increase for each of the Index’s 11 sectors, with Information Technology and Materials leading the way.

Revenue growth rate estimates remain favorable as well. In fact, observations for both 2025 and 2026 also increased since our last post on this topic.

As of 2/23/26, the Index’s 2025 estimated y-o-y revenue growth rate stood at 7.2%, up from 6.3% on 10/31/25. Ten of the Index’s eleven sectors reflect positive y-o-y revenue growth rate estimates in 2025, with eight of them estimated to surpass 5.0% (up from seven in October). Information Technology commands the highest estimated revenue growth rates at 17.4% and 20.5% in 2025 and 2026, respectively. 

Takeaway: Equity market returns remain exceptional. The Index rewarded investors with average annual total returns of 21.1% over the three-year period ended 2/23/26. For comparison, the Index averaged an annual total return of 9.8% from 1928 to 2025. Index earnings and revenue growth rates remain persistently positive, with estimates for 2025 and 2026 increasing since our last post. We find calendar year 2026 estimates particularly notable as they reflect difficult comparisons for most sectors. As revealed above, Information Technology and Materials stand out among their peers for 2026 earnings growth rate estimates. Time will ultimately reveal the accuracy of these estimates, but we maintain that higher revenues could be the best catalyst for earnings growth, which in turn, may provide ballast to lofty multiples.

This chart is for illustrative purposes only and not indicative of any actual investment. There can be no assurance that any of the projections cited will occur. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. The respective S&P 500 Sector Indices are capitalization-weighted and comprised of S&P 500 constituents representing a specific sector.

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