’Exceptionally strong’ U.S. earnings the driving force behind stock market rally

Goldman Sachs says "exceptionally strong" Q1 earnings are the main driver of the recent U.S. stock market rally, with robust results concentrated in mega-cap tech. With 63% of S&P 500 firms having reported, EPS is running about 16% growth excluding one-offs (aggregate figure at 25% but distorted). Amazon, Alphabet, Meta and Microsoft collectively show ~20% revenue growth and ~61% earnings growth. Rising AI hyperscaler capex (now estimated at $751bn for 2026) is lifting earnings revisions for AI infrastructure names, supporting the rally, but margin compression from higher input costs and elevated positioning (Goldman sentiment indicator 1.7) pose short-term risk to returns.