U.S. Corporate Profits Hit Record $4.7 Trillion Driven By AI Spending

U.S. corporate profits reached an all-time record of more than $4.7 trillion in the second quarter, a surge driven primarily by investment in artificial intelligence, according to data from the U.S. Commerce Department.

Analysts project that third-quarter earnings per share for the S&P 500 will rise 29 percent compared with the same period in 2025. This projected increase follows a second quarter in which earnings per share jumped 51 percent year over year.

Ben Snyder, chief U.S. equity strategist at Goldman Sachs Research, described the recent earnings growth as "extraordinary." The bank noted that this performance far exceeds historical norms, with the 51 percent growth in the second quarter dwarfing the 7 percent average growth seen over the last 30 years. Over the last four quarters, earnings per share grew 26 percent.

Goldman Sachs attributed nearly half of the S&P 500's growth in 2026 to AI investment. The firm stated that while recent strength has raised concerns among some investors about an "earnings bubble," its strategists expect the boost from AI investment to gradually fade. As a result, productivity gains from AI will become increasingly important for stock profitability.

Snyder argued that the current figures do not indicate a bubble, noting that equity prices have failed to keep pace with surging earnings. "Because equity prices have failed to keep pace with surging earnings, near-term valuations show no hint of a bubble," he said. The bank's base case is for S&P 500 earnings growth to decelerate, not collapse, in coming years.

The financial outlook is heavily influenced by capital expenditures among major technology firms. Goldman Sachs reported that the biggest hyperscaler companies are on pace to spend $800 billion on capital expenditures this year, representing a 94 percent increase over 2025. The firm projects this investment will continue to grow, with $1.2 trillion in capex expected in 2027 and $1.4 trillion projected for 2028.

Snyder highlighted that hyperscaler capex has consistently surprised consensus estimates in recent years. He stated that the potential for additional surprises creates a wide range of potential S&P 500 earnings outcomes going forward.