Week 1: Reactions Diverge from Fundamentals

Research evidence excerpt

Week 1: Reactions Diverge from Fundamentals

Equity Research

The EPS Report — July 19, 2026

Equity Strategy

Our Call Ohsung Kwon, CFA

• 2Q EPS is off to a strong start, tracking a 12% beat so far. EquityOhsung.Kwon@wellsfargo.comAnalyst | Wells Fargo Securities,| 212-214-8027LLC

• Financials beat by 24%, as AI cycle boosts fundamentals for Capital Markets. John Glascock

Associate Equity Analyst | Wells Fargo Securities, LLC

• We also see green shoots in Industrials. John.Glascock@wellsfargo.com | 212-214-1145

• Despite positive EPS, reactions have been one of the worst in history. Kenneth Tsu

Kingyiu.Tsu@wellsfargo.com | 212-214-8497

12% beat in early days, led by Financials Zackary Morris

Reported 2Q EPS from 50 companies (13% of market cap) came in 12% above consensus Associate Equity Analyst | Wells Fargo Securities, LLC

Zackary.Morris@wellsfargo.com | 212-214-6549

so far, while sales beat by 3% (Exhibit 5-Exhibit 6). 60%/46%/44% of companies beat on

EPS/sales/both (vs. 48%/32%/25% avg. Week 1). 2Q EPS is tracking +23% YoY, +1% since Alec Chapman

7/1. FY26 EPS is +0.4% MTD and +9% for the year. Financials (19 companies) beat by Associate Equity Analyst | Wells Fargo Securities, LLC Alec.Chapman@wellsfargo.com | 212-214-8235

24% so far. Of the 18 EPS guides so far, half came in above consensus (vs. 36% historical

average). All 3 capex guides were above consensus.

Exhibit 2 - 2Q EPS +1.0% so far. We expect

an +8% beat.

Big Banks have become AI-adjacent sector S&P 500 2Q26 Consensus EPS estimate trend

Big Banks are starting to reap benefits from the AI investment cycle: 1) we track $190B of vs. historical avg. since 2004 (7/25-present)

AI-related debt issuance since March, with Tech's share of total corp. debt market surging 2Q26 EPS Historical avg.