Deutsche Bank said in a note Monday that it has raised its S&P 500 earnings estimates for 2026 and 2027, citing an unusually strong and broad-based second-quarter reporting season that has cleared a record-high bar.
In the note, the bank's chief strategist Binky Chadha observed that, even though the bottom-up consensus expected 26% growth heading into the earnings season, results are instead "beating strongly and robustly." The share of companies topping estimates reached 87%, a record high, while the aggregate beat across the index stood at 7% - a level the bank described as still strong and attributable to both sales growth and margin expansion.
Deutsche Bank emphasized that analysts have continued to raise forward earnings estimates for the second half of 2026 and for 2027, a pattern the firm called unusual because it contrasts with the typical trend of cuts at this stage of the reporting cycle.
On Deutsche Bank's calculations, S&P 500 earnings growth is set to accelerate sharply from 25% in the first quarter to 33% in the second - what the firm characterized as "one of the highest ever outside of recoveries from recessions." The bank noted that this acceleration is being driven by revenue expansion at a 25-year high and by margins climbing to a new record of 15.7%.
The breadth of the improvement was underlined: all 11 sectors of the index are on track to post positive year-over-year growth, and eight sectors are expected to deliver double-digit gains. Deutsche Bank also pointed out that the contribution to earnings growth from megacap and broader tech strength has declined - dropping from 90% a year ago to 57% now - which leaves AI beneficiaries and the remainder of the market contributing at roughly similar levels.
Taking into account the stronger-than-expected beats, a recent pickup in PMIs, and persistent outsized growth within the technology complex, Deutsche Bank raised its 2026 EPS forecast to $358 from $342, and lifted its 2027 estimate to $420 from $390. Those revisions imply year-over-year earnings growth of 28% for 2026 and 17% for 2027.
Context and implications
Deutsche Bank's note frames the current earnings season as unusually favorable: high incidence of beats, solid top-line momentum, and record margins. The firm interprets this mix as sufficient to justify material upward revisions to multi-year earnings projections rather than the more typical trimming of forecasts at this stage.