US Equity Strategy Watch 1Q26 wrap-up: Strong beats, cautious raises

Research evidence excerpt

US Equity Strategy Watch 1Q26 wrap-up: Strong beats, cautious raises

26 May 2026

US Equity Strategy Watch EquityNorth AmericaStrategy

1Q26 wrap-up: Strong beats, cautious raises

◆ Another exceptional earnings season: highest S&P 500 EPS Nicole Inui*, CFA

growth & highest EPS beat ratio since the post-pandemic Head of Equity Strategy, Americas Banco HSBC S.A.

reopening surge nicole.inui@hsbc.com

+55 11 2802 3475

◆ Earnings strength broadened beyond mega caps, but the Preethkar R*

Associate

rally remains narrow Bangalore

◆ Earnings revisions are turning up, but unevenly; concentrated * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

in IT, industrials and energy not registered/ qualified pursuant to FINRA regulations

1Q26 delivered another exceptional earnings season, with S&P 500 EPS up

27% y/y versus consensus expectations of 13%, extending the run to a sixth

consecutive quarter of double-digit growth and marking the strongest pace since the

post-reopening surge (since 2Q21). The earnings story continued to broaden: almost

every sector saw an acceleration in growth and the median company reported EPS

was +14% versus +10% in the prior quarter. That said, the broadening in

fundamentals still hasn’t translated into broader share price leadership, with the

equity rally remaining narrow (US Equity Strategy - Finding alpha amid market

dislocations, 22 May 2026).

Mega-caps lead earnings growth, but all robust. Growth leadership remained

anchored in the mega-caps, with the Mag 7 again driving outsized upside as EPS

rose by c60% (helped by one-offs, though Mag 7 EBIT still increased by 40%+).

Importantly, strength was not confined to the largest names: excluding the Mag 7,

EPS growth was still c20%. At the sector level, IT led with roughly 50% y/y EPS