Just 3 stocks are behind 75% of the S&P 500's bullish earnings revisions since the Iran war
NYSE
- Analysts have been steadily revising S&P 500 earnings expectations higher in recent weeks.
- Goldman said that a small handful of stocks have driven most of the upward revisions for the whole index.
- Tech and energy stocks dominated bullish earnings revisions, while other sectors saw negative revisions.
Wall Street analysts have raised their S&P 500 earnings estimates, seen as a bullish signal for the market, but Goldman Sachs says a small handful of stocks account for most of those revisions.
The S&P 500 is trading above pre-Iran war levels, back in record territory after a volatile stretch of weeks. One driver of the latest move to all-time highs has been the upward revision in first-quarter earnings expectations, which has helped investors look past the war.
Yet, Goldman said in a note on Friday that just three companies account for 75% of the positive revisions across the S&P 500—Micron, Exxon, and Chevron.
"The increase in consensus S&P 500 earnings estimates has been driven by narrow pockets of strength," the analysts wrote.
Tech is a big driver, due to continued tailwinds from AI, but the revisions have come mainly from a small corner of the sector. Hardware, particularly memory stocks, has seen bullish changes to the earnings outlook. Micron Technology alone is responsible for 51% of the upward revisions in the index.
SanDisk was also among the top contributors, though it drove only 3% of revisions. Chipmaker Broadcom added 10%.
Goldman said that energy and tech have accounted for nearly all of the positive revisions, and that the median S&P 500 company has seen no change to its 2026 earnings outlook.
"The recent revisions to the aggregate S&P 500 earnings outlook have been driven almost entirely by the Energy and Technology sectors, with 8 of 11 sectors experiencing no increase in EPS estimates," the bank said.
The analysts explained that the upward earnings revisions in the energy sector reflect the impact of oil on the S&P 500, and six out of the top 10 contributors to the S&P 500's positive earnings revisions since the start of the war in Iran are energy stocks.
Exxon, Chevron, ConocoPhillips, Valero Energy, EOG Resources, and Occidental Petroleum make up more than a third of the bullish revisions.
The energy sector has benefited from the conflict in the Middle East, as the war-related oil shock sent prices surging. Producers are expected to report gains from energy price spikes during the war. Yet, their stocks have mostly peaked in recent weeks, reflecting investors potentially pricing in lower crude prices in the near-term as they start to position for an end to the war.