U.S. Equity Insights: Is current earnings growth sustainable?

Recently, we raised our FY27 S&P 500 EPS estimate to $414, implying 13.4% Y/Y growth from our $365 FY26 estimate. EPS growth is on track to reach an extraordinary 31% growth this year in FY26, and we have fielded some investor concerns as to whether this is "peak" or "unsustainable" earnings. While we do expect that EPS expansion will moderate from 2026's unusually high level, we also see reason to believe that FY27 growth will remain well above the LT median, marking the first four-year stretch of double-digit EPS growth since the mid-2000s and pushing the 3Y EPS CAGR to its highest level since 2012. AI remains the dominant earnings engine, and fears around a capex cliff or component pricing collapse appear overblown: hyperscaler capex and S&P 500 earnings are moving in lockstep, compute demand continues to outstrip supply, and ex-hyperscaler financing structures could expand the AI capital pool by an additional 20% next year. Beyond AI, revisions and margin expansion are broadening,