U.S. S&P 500 third-quarter net income forecast to rise 30%, led by AI

[Financial News] As U.S. publicly traded companies began reporting their third-quarter results in earnest on the 13th (local time), forecasts emerged that their net income would rise 30% from the same period a year earlier. However, most of the net income is expected to come from major companies involved in artificial intelligence (AI).
The U.S. Wall Street Journal reported this on the 25th, citing analysis by local market research firms FactSet and Dow Jones. It forecast that net income at companies listed on the S&P 500 would rise 30% in the third quarter of this year compared with the same period a year earlier.
The WSJ estimated that NVIDIA and Micron, U.S.-based AI semiconductor companies, would account for 34% of the increase in earnings. Micron reported quarterly net income last month that had surged more than tenfold year over year, and analysts expect NVIDIA’s net income to surge 90% as well.
The top 10 companies, including Broadcom and Meta Platforms in addition to the two firms, are expected to account for about two-thirds of the total increase in net income. The top 10 also include oil and gas giants such as ExxonMobil and Chevron, which have benefited from rising oil prices amid the Iran War, alongside AI companies.
The WSJ noted that AI-related stocks are growing on expectations that the massive investments currently being made in AI data centers will generate sustained profits in the future. It added that there are concerns stock prices could fall if the investments fail to deliver the expected returns. Ed Yardeni, founder of U.S. market research firm Yardeni Research, said, "There is a concern that all these data centers may eventually have to be converted into pickleball courts."
Some experts said the stock market outlook is not bleak simply because AI is driving net income growth. The WSJ forecast that earnings at S&P 500 companies outside the top 10 stocks would rise 10% year over year. Chris Crisanti, chief market strategist at U.S. asset manager MAI Capital Management, said, "The top players are leading the team, but the rest are doing their part." Some also point out that because share prices have not risen excessively relative to earnings growth, concerns about overvaluation are lower than at the start of the year.


[email protected] Park Jong-won Reporter