Corporate America has never been this upbeat about future profits

By Bill Peters

Tech companies have led the way in terms of issuing optimistic earnings forecasts

Super Micro Computer issued a quarterly profit forecast that topped analysts' expectations.

As third-quarter earnings kick off this week, more companies than ever have expressed optimism about their bottom lines.

A record number of S&P 500 SPX companies issued have third-quarter profit forecasts that were better than Wall Street's expectations, according to a FactSet report on Friday. That was particularly true within the tech universe, where the artificial-intelligence boom has driven colossal gains.

In total, 116 S&P 500 companies had put out earnings-per-share outlooks for the third quarter, according to the report. Forecasts from 72 of those companies came in above analysts' estimates. That's the highest number since FactSet first started tracking the statistic some 20 years ago, the report said. The previous record was 65 companies, set in the second quarter of 2021.

Much of the current optimism comes from FactSet's information-technology sector, in which 44 companies issued upbeat third-quarter profit outlooks that topped analysts' estimates. That figure ties the record for the most information-technology companies offering positive EPS forecasts, set in the second quarter of this year, FactSet said.

The tech sector is home to two of the S&P 500's heaviest lifters: Nvidia (NVDA) and Micron Technology (MU). Those companies and some of their peers have benefited from robust demand for the chips needed to fuel a massive and costly AI build-out. Many AI-linked semiconductor companies don't have enough supply to meet all their demand and have been able to raise prices, benefiting their bottom lines.

See also: Nvidia makes a statement with historic $150 billion buyback announcement

The IT sector also includes network-infrastructure provider Super Micro Computer (SMCI), whose EPS forecast for the quarter ending on Sept. 30 topped estimates.

During Super Micro Computer's earnings call in August, CEO Charles Liang said demand for its AI and IT products was stronger than ever, and that it had become a "one-stop shop company for customers who want to build their data center or AI factory quicker and better."

Similarly, electronics testing-gear maker and robotics developer Teradyne (TER) , which has focused increasingly on AI, issued a third-quarter EPS outlook that surpassed Wall Street's expectations. Recent growth has highlighted "AI demand across all parts of the business," Teradyne CEO Greg Smith said on the company's earnings call in July.

In total, companies in the S&P 500 are expected to notch a 29.5% increase in their earnings, according to FactSet.

-Bill Peters

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10-04-26 1000ET