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Deutsche Bank Lifts S&P 500 Earnings Forecasts on Record-Breaking Q2 Results
Deutsche Bank has raised its earnings per share (EPS) forecasts for the S&P 500 for 2026 and 2027, citing an exceptionally strong second-quarter earnings season that surpassed already high expectations. The bank's analysis, detailed in a note on Monday, points to a broad-based acceleration in corporate performance as the primary driver for the upgraded outlook.
A Record-Setting Earnings Season
According to Deutsche Bank's chief strategist Binky Chadha, Q2 earnings are "beating strongly and robustly" despite a high bottom-up consensus expectation for 26% growth heading into the season. The bank highlighted that the share of companies beating estimates has reached a record high of 87%.
The aggregate earnings beat of 7% remains strong, driven by both robust sales and expanding margins. In a departure from typical trends, the bank noted that analysts have continued to upgrade their forward earnings estimates for the second half of 2026 and for 2027, whereas cuts are more common at this stage of an earnings season.
Broad-Based Growth and Record Margins
The report states that S&P 500 earnings growth is on track to accelerate from 25% in the first quarter to 33% in the second quarter, one of the highest growth rates recorded outside of a post-recession recovery. This surge is underpinned by sales expansion at a 25-year high and corporate margins rising to a new record of 15.7%.
AdDeutsche Bank emphasized the breadth of the positive results, with all 11 market sectors poised for positive growth and eight expected to post double-digit gains. The contribution from megacap growth and technology stocks has reportedly fallen from 90% a year ago to 57%, signaling that a wider range of companies is now contributing to the market's earnings strength.
Revised Forecasts
Based on the strong Q2 performance, a recent pickup in Purchasing Managers' Indexes (PMIs), and sustained growth in the tech sector, Deutsche Bank has revised its S&P 500 forecasts upward.
- 2026 EPS Forecast: Raised to $358 from a previous estimate of $342, implying 28% annual growth.
- 2027 EPS Forecast: Raised to $420 from $390, representing 17% projected growth.
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