For investors concerned that the corporate profit engine is running out of steam, a new analysis suggests there is plenty of fuel left in the tank. According to aggregated forecasts from Wall Street's sell-side analysts, earnings growth for companies in the S&P 500 index is projected to accelerate each year through 2027. This data, compiled by Jefferies, points to a powerful and uncommon trend: three consecutive years of double-digit earnings expansion.
A Historical Precedent for Strong Returns
This projected pattern is a rarity in modern market history. Over the past 35 years, the S&P 500 has achieved double-digit earnings growth for three straight years on only two other occasions: from 1993 to 1995 and again from 2003 to 2005. The historical performance following these periods is notable. During each of those prior three-year streaks, the benchmark index delivered an average annual return of 13%, outperforming its long-term multi-year average of 10%.
"Earnings growth is not only expected to maintain its current trajectory above the long-term historical average but may also be taking another leg higher," said Andrew Greenebaum, senior vice-president of U.S. equity product management at Jefferies. He added that fundamentals continue to look directionally supportive of U.S. equities broadly.
The Road Ahead: Sector Leaders and Lingering Risks
The current earnings picture remains robust. As the fourth-quarter reporting season approaches, analysts anticipate S&P 500 companies will post profit growth of 8.3%, according to Bloomberg Intelligence data. This would bring the full-year 2025 growth figure to approximately 12%.
Looking forward, estimates for 2026 have climbed 5% since the peak of tariff-related uncertainty, now sitting at about $310 per share. This implies a year-over-year earnings growth of 13%. Forecasts suggest further acceleration to 14% in 2027.
Not all sectors are expected to contribute equally. Data indicates that the information technology, materials, and industrials sectors are forecast to post the highest year-over-year earnings growth in 2026. In contrast, traditionally defensive consumer staples stocks are projected to see profit expansion that lags behind the broader market.
However, analysts caution that a lot must go right on both monetary and geopolitical fronts for these optimistic forecasts to materialize. Uncertainty persists around the pace of Federal Reserve interest-rate cuts, and the full economic impact of U.S. President Donald Trump's tariffs has yet to be fully realized.
Elevated Expectations and the Potential for Volatility
It is important to note that sell-side analysts covering S&P 500 stocks are not typically known for pessimism, meaning their expectations may already be stretched. This sets a high bar for corporate America to clear.
"The earnings picture is definitely strong, but when expectations are that elevated, we typically see some volatility if results don’t meet forecasts," warned Michael Casper of Bloomberg Intelligence.
Despite these risks, the prevailing analyst outlook depicts a sustained sense of confidence. The projection reinforces the belief that a key pillar of the current three-year stock market bull run—corporate earnings strength—remains intact, even amid concerns about stretched positioning and elevated valuations.
