The S&P 500 just posted its best earnings growth in over three years. Blended earnings per share grew between 27.1% and 28.4% year-over-year in Q1, the strongest performance since Q4 2021, when the index clocked 32% growth.
The Magnificent Seven, that now-familiar group of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla, drove much of the acceleration. Their collective EPS surged 63.2% year-over-year. But here’s the thing: the other 493 companies in the index aren’t just along for the ride anymore.
The underdogs are showing up
Non-Mag7 companies posted 17.4% EPS growth in Q1, their fastest clip in five years. Four of the top five contributors to Q1 earnings growth were Mag7 companies. Micron was the lone outsider cracking that top tier. And during a recent reporting week, Alphabet, Amazon, and Meta alone accounted for 71% of the incremental rise in net dollar S&P 500 earnings estimates.
Beat rates are running well above historical norms
