Tech Titans Power S&P 500 Earnings Upgrades
In a significant development during the September 2025 earnings season, mega-cap technology companies have emerged as the primary drivers of upgrades for the S&P 500 index. According to a comprehensive analysis from Yes Securities, these corporate giants continue to propel earnings growth, though their expansion momentum is beginning to stabilize.
The elite group known as the "Magnificent 7"—comprising Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia, and Tesla—recorded an impressive 1.0% upgrade in their earnings projections. This performance substantially outpaced the broader S&P 500, which saw a modest 0.4% increase, while the index excluding these mega caps actually experienced slight downgrades.
Concentrated Strength with Normalization Ahead
Hitesh Jain, lead analyst at Yes Securities, emphasized that this pattern highlights the continued concentration of earnings power within America's largest technology firms. "The ongoing dominance of mega-cap companies in driving market earnings remains unmistakable," Jain noted in the report.
However, future projections indicate a trend toward normalization. While Mega Cap earnings per share (EPS) skyrocketed by an astonishing 60% during calendar year 2024, Yes Securities anticipates this growth will moderate to approximately 35% in 2025. Looking further ahead, projections suggest a continued decline to around 13-15% by 2026-2027.
In comparison, S&P 500 earnings growth is expected to maintain a steadier trajectory within the 12-14% range, suggesting the performance gap between mega caps and the broader market may narrow as base effects become more pronounced.
Sector Divergence and Mixed Profitability
The brokerage's assessment revealed notable sector variations beneath the surface. While certain cyclical sectors and technology-related industries are demonstrating renewed strength, challenges persist in energy, materials, and real estate segments.
The revenue performance among Magnificent 7 companies proved particularly robust, with nearly all constituents exceeding expectations. AI-driven semiconductor and cloud services emerged as especially strong segments, reflecting continued technological transformation.
However, profitability presented a more mixed picture. Four of the seven companies failed to meet profit projections, primarily due to escalating operating expenses, substantial investments in AI infrastructure, and intensifying competition in digital advertising and streaming markets.
Looking toward 2026, the earnings landscape appears increasingly complex, characterized by strong top-line growth, uneven margin progress, and a widening performance gap between structural market leaders and laggards.
Polarized Revisions Across Market Segments
Yes Securities identified clear divergences in earnings revisions for calendar year 2026. Upgrades were predominantly concentrated among specific technology, financial, and industrial companies, with standout performers including Bunge, Western Digital, Amphenol, Newmont, and various growth-oriented tech platforms.
Conversely, significant downgrades affected numerous large-cap sectors, particularly real estate, energy, healthcare services, and traditional industrial businesses. Some individual downgrades exceeded 40-60%, indicating substantial fundamental deterioration in specific market pockets.
Sector-level trends reinforced this polarization. Communication Services, Financials, and Technology recorded the highest proportion of upgrades, while Energy, Materials, and Utilities were dominated by downgrades. This pattern aligns with evolving market dynamics, including moderating commodity prices and softening industrial demand.
The overall earnings outlook heading into 2026 remains positive yet increasingly nuanced, requiring investors to navigate carefully between sectors and companies demonstrating sustainable growth versus those facing structural challenges.
