Tech Earnings Are Expected to Jump 63%. Take Out the Chipmakers and It's 24%.
- FactSet expects Information Technology earnings to grow 63.3% year over year in Q3 2026. Excluding semiconductors and semiconductor equipment, growth falls to 24.2%.
- The biggest contributors to upward estimate revisions since June 30 include NVIDIA, Dell Technologies, Cisco Systems and Intel.
- The whole S&P 500 is expected to report 28.9% earnings growth in Q3. Energy (+109.6%) and IT (+63.3%) lead.
- "AI" came up on 331 of 493 (67%) S&P 500 Q2 earnings calls, the third straight quarter above 65%. The 5-year average is 178 calls.
- AI mentions by sector: IT 97%, Financials 91%, Communication Services 90%.
The headline growth rate hides a narrow engine
FactSet's latest weekly earnings report puts expected third-quarter earnings growth for S&P 500 Information Technology at 63.3%. That's an extraordinary number for a sector this large.
The more useful number is a few lines down. Excluding the semiconductors and semiconductor equipment industry, IT earnings growth falls to 24.2%. One industry accounts for more than half of the sector's growth.
That doesn't make 24% weak. It's very strong growth for software, hardware and IT services. But it means the tech story in 2026 is mostly a chip story, and chips are the most cyclical part of technology.
Who's doing the lifting
FactSet lists NVIDIA, Dell Technologies, Cisco Systems and Intel among the biggest contributors to rising IT earnings estimates since June 30. The common thread is AI data-center spending: accelerators, servers, networking and, increasingly, memory and foundry capacity.
Across the whole S&P 500, third-quarter earnings are expected to grow 28.9%. Two sectors dominate:
| Sector | Expected Q3 2026 earnings growth |
|---|---|
| Energy | +109.6% |
| Information Technology | +63.3% |
| Communication Services | +51.0% |
| Materials | +30.4% |
| S&P 500 overall | +28.9% |
All 11 sectors are expected to grow, but the index's earnings boom leans on oil prices and AI spending.
AI is on almost every call
FactSet counted "AI" on 331 of 493 S&P 500 earnings calls in Q2, or 67%. That's the third straight quarter above 65%, far above the 5-year average of 178 calls and the 10-year average of 114.
By sector, it came up on 97% of Information Technology calls, 91% of Financials calls and 90% of Communication Services calls.
Mentions aren't earnings, though. Most companies talking about AI are spending on it: buying chips, cloud capacity and software. A smaller group is selling it and booking the profit. That gap is exactly what shows up in the 63% vs 24% split. We looked at the same question in AI capex: who actually gets paid.
What this means for your portfolio
You probably own more chip exposure than you think. A standard S&P 500 or Nasdaq-100 fund puts a large share of your money in a handful of chipmakers and hyperscalers. Our 15-minute AI exposure check shows how to measure it.
Cyclical earnings deserve lower multiples. Semiconductor profits have boomed and busted many times. Strong growth priced as if it'll last forever is the classic setup for disappointment. See the semiconductor cycle.
Rates matter here too. With the 10-year Treasury near 5%, high-growth stocks face more competition from bonds. If AI spending slows while yields stay high, tech valuations get squeezed from both sides.
Diversification is cheap insurance. Equal-weight funds, broad global funds, or simply holding some bonds reduce your dependence on one industry's cycle.
The honest uncertainty
AI spending could keep surprising to the upside. Hyperscalers have repeatedly raised their capital budgets. If that continues into 2027, the chip-heavy earnings story may have further to run. The point isn't that it will end soon. It's that a large part of market earnings now depends on one spending cycle, and investors should size their exposure knowing that.
Frequently asked questions
How much are tech earnings expected to grow in Q3 2026?
FactSet's September 18 estimate is 63.3% year-over-year growth for the S&P 500 Information Technology sector. Excluding the semiconductors and semiconductor equipment industry, the estimate falls to 24.2%. All six industries in the sector are expected to grow.
Which companies are driving tech earnings growth?
FactSet names NVIDIA, Dell Technologies, Cisco Systems and Intel among the largest contributors to the increase in IT earnings estimates since June 30. Semiconductors are the largest single contributor to the sector's growth.
How many companies mention AI on earnings calls?
In the second quarter of 2026, 331 of the 493 S&P 500 companies that held earnings calls, or 67%, mentioned 'AI.' That's the third straight quarter above 65%, compared with a 5-year average of 178 calls and a 10-year average of 114.
Is it risky that tech earnings depend so much on semiconductors?
It adds concentration risk. Semiconductor earnings are cyclical and depend heavily on AI data-center spending. If that spending slows, both the IT sector's growth and the broad S&P 500's earnings could fall faster than headline forecasts suggest. Diversifying beyond cap-weighted tech exposure can reduce that risk.
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Sep 18, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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