Farewell to "Tech Stocks Standing Alone"! Over 75% of S&P 500 companies have achieved profit growth, the highest since 2021.

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In this earnings season, S&P 500 constituent companies are showing the broadest profit growth in more than four years, offering a measure of solace to U.S. stock investors enduring the worst single-week performance since October. This trend indicates that U.S. corporate earnings growth is moving away from dependence on a handful of tech giants.

According to data compiled by Bloomberg Industry Research, over 75% of S&P 500 companies that have reported results have achieved year-on-year profit growth. This is the highest proportion since the third quarter of 2021.

This data may help alleviate market concerns about U.S. corporate earnings growth being overly reliant on a few tech giants. Since the end of 2022, the "Mag 7" have surged a cumulative 310%, sparking fears that a bubble may be forming in U.S. stocks. This week, tech stocks led the market lower as investors questioned the returns on massive AI investments; the S&P 500 dropped 2%, marking its worst week since October 10 of last year.

Non-Tech Sectors Begin to Take the Lead

Meanwhile, the broader rally in other sectors is boosting market confidence. The equal-weighted S&P 500 index, which lessens the influence of tech giants, has risen 3.5% so far this year, outperforming the market-cap-weighted benchmark index.

The latest earnings season shows that sectors such as industrials, consumer goods, and healthcare are beginning to play their roles in driving index returns. Investors expect this trend to continue to expand.

“Growth is becoming more abundant, which means profits are broadening as well,” said Guy Miller, Chief Strategist at Zurich Insurance. “What we’re seeing is that you don’t have to invest only in tech companies.”

Standout performers among non-tech sectors include General Motors, whose stock rose 9% due to strong profit prospects. Procter & Gamble also posted gains, buoyed by signs of a U.S. sales rebound; the company’s products include everything from toilet paper to detergents and skincare.

Strategists Predict the Trend Will Continue

Strategists from JPMorgan and Goldman Sachs, among others, expect this trend of earnings broadening to persist over the coming months, with strong economic growth prospects continuing to drive corporate profits.

“Strong and accelerating economic growth in the first half of 2026 will create stronger near-term tailwinds for smaller and more cyclical stocks over the market’s largest stocks,” Goldman Sachs strategist Ben Snider wrote in a recent report.

Analysts also anticipate the profit gap between the Big 7 tech stocks and the remaining 493 constituents of the S&P 500 to narrow during the remainder of this year.

According to data tracked by Bloomberg Industry Research, the "Mag 7" are expected to see profits grow 18% in 2026, down from a 28% gain last year. Meanwhile, the rest of the index’s constituents are forecast to accelerate profit growth from 8% in 2025 to 12% this year.

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