Technology stocks continue to dominate the bull market: S&P 500 profit expectations surge, with the Mag 7 still the strongest engine.

According to the latest statistical data compiled by LSDEG I/B/E/S, Wall Street analysts' full-year earnings growth expectations for the S&P 500 index in 2025 have significantly increased from a year-on-year increase of 20.9% on October 17 to the latest growth expectation of +25.4% as of January 16, 2026. According to consensus expectations among Wall Street analysts, it is anticipated that the earnings growth rate in the broad technology sector of the S&P 500 index in 2026 will outperform the overall earnings growth of the S&P 500 index. As of the past weekend, based on the latest consensus expectations, Wall Street analysts forecast a full-year earnings growth rate of +25.4% for the broad technology sector of the S&P 500 index in 2025, with an expected earnings growth rate of an astonishing +31.1% for the technology sector in 2026, significantly higher than the 2025 growth rate and well above the historical average earnings level of the US stock market. Among the broad technology sector of the US stock market, the so-called "Mag 7" (the seven major tech giants) that hold high weights in the S&P 500 index and the Nasdaq 100 index have the greatest impact on the earnings of the technology sector. According to analysts' consensus expectations compiled by institutions, the overall earnings growth rate of the "Magnificent Seven" (Mag 7) in 2026 is estimated to be around 24%, while the earnings of the remaining 493 companies in the S&P 500 are expected to grow by about 12.5%. This means that the earnings growth rate of the "Mag 7" is nearly double that of the rest of the major US market companies. Therefore, from the perspective of earnings expectations and market weight structure, the technology sector (especially the seven major tech leaders) remains the "core force" driving the bullish market performance in the US stock market in 2026, far exceeding the overall earnings expectations of the remaining 493 component companies in the index, intensifying their influence on index trends. Despite the increasingly obvious market rotation, from the perspective of earnings expectations, this rotation may not last long, focusing on the unprecedented construction of AI computing power infrastructure and the AI investment theme of the Mag 7 (the seven major tech giants) during the full year of 2026, just like in 2024 and 2025, which is expected to be the strongest theme in the stock market for the entire year of 2026. The so-called "seven major tech giants," or "Magnificent Seven" (Mag 7), which hold significant weights in the S&P 500 index and the Nasdaq 100 index (approximately 35%), include: Apple Inc., Microsoft Corporation, Alphabet Inc. Class C, Tesla, Inc., NVIDIA Corporation, Amazon.com, Inc., and Meta Platforms, the parent company of Facebook. They are the core driving forces behind the record highs of the S&P 500 index and are considered by top Wall Street investment firms to be the most capable of bringing substantial returns to investors in the largest technological transformation background since the Internet era. Whether the bull market in the US stocks can continue, the financial reports and future performance outlook of the "Magnificent Seven" are crucial. Starting the year 2026, the US stock market is off to a good start, with investors generally expecting the bull market that has been ongoing since 2023 in the US stock market to continue in 2026. However, the technology sector and large-cap growth companies may not see a major breakthrough in the bull market until the financial results of the Mag 7 and the three leading companies in the AI computing power industry chain - Broadcom Inc., AMD, and Oracle Corporation for the fourth quarter of 2025 and the important guidance for the first quarter and full year of 2026 are released. Due to the US stock market being closed on Monday, January 19, the compilation of market earnings expectations may also stagnate this week. Previously, over the past four weeks, the LSDEG I/B/E/S data had encountered problems starting in mid-December, resulting in delayed updates to the earnings reports for the S&P 500 index. LSDEG I/B/E/S has acknowledged this issue recently and has made updates and timely corrections. The following are the changes in full-year earnings expectations for the S&P 500 index and the technology sector earnings expectations for 2025, 2026, and 2027 (summarized progress since late September 2025). From December 5th to December 12th, there was a significant increase in earnings expectations. However, there was a slight pullback in the week after December 19th. As indicated above, the overall earnings expectations for the S&P 500 index have increased from +20.9% on October 17, 2025, to an expected earnings growth of +25.4% on January 16, 2026. Within a quarter, this growth is very evident. The strong performance data and future performance outlook of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, which is known as the "king of chip manufacturing," supported this growth logic in the fourth quarter of 2025. It is worth noting that analysts generally expect a moderate increase in the upward revision of earnings growth rate expectations for the technology sector in 2026, which is normal given the strong earnings in 2025 leading to a high base effect, but still higher than the analysts' overall expected year-on-year earnings growth rate for 2025. Analysts generally expect that the technology sector will have a faster earnings growth rate in 2026 compared to 2025. As of the past weekend (i.e., until last Friday), Wall Street analysts unanimously expected a full-year earnings growth rate of +25.4% for the broad technology sector of the S&P 500 index in 2025, with some fiscal year benchmarks included, and the statistical period for that year is expected to end around mid-February 2026. Analysts unanimously forecast that the earnings growth rate of the broad technology sector of the S&P 500 index in 2026 will reach +31.1%. Although the earnings growth rate of the technology industry, the valuation weight, and the impact of capital spending influence in other industries are accelerating, the earnings of the technology industry, especially the seven major tech giants, continue to occupy a core position, driving the overall growth of the S&P 500 index. The earnings increment of the technology industry is expected to outshine other sector growth expectations. AI remains a critical foundational force in driving technology earnings and overall market bullish sentiment and has been dominating the US stock market since 2023, indicating that tech stocks remain a decisive force in determining whether the bullish market will continue in 2026, with their exceptionally strong earnings growth expectations providing important underlying bullish logic for the overall US market. While other sectors are also accelerating, the earnings growth, valuation weight, and influence of capital spending in the technology sector make it the most likely force to lead the market in 2026. Among these, NVIDIA Corporation, Alphabet Inc. Class C, and Microsoft Corporation, which have high weights in the technology sector, contribute the most to earnings growth and have the most significant impact. In 2026, the Mag 7 may continue to epitomize the "market-leading myth." The "seven major tech giants" in the US stock market - namely Apple Inc., Microsoft Corporation, NVIDIA Corporation, Alphabet Inc. Class C, Amazon.com, Inc., Meta Platforms, and Tesla, Inc. - have been the core driving forces leading and propelling the entire US stock market during the long-term bull market since 2023. With strong revenue brought by AI deployment, solid fundamentals, continuous robust free cash flow reserves, and expanding stock buyback programs, these tech giants have attracted capital inflows from around the world. The new round of US stock earnings season has begun, and it is undeniable that the financial performance and guidance of the "Magnificent Seven" as well as the three leading companies in the AI computing power industry chain - Broadcom Inc., AMD, and Oracle Corporation - are crucial in determining the overall earnings and bullish trend of the US stock market. Among the top three companies in market capitalization in the S&P 500 index, two companies - Apple Inc. (AAPL.US) and Microsoft Corporation (MSFT.US) - are set to release earnings in late January 2026. Microsoft Corporation plans to announce its performance on January 28th Eastern Time, while Apple Inc. will release its earnings report on January 29th Eastern Time, so we will have to wait a few weeks to hear the latest financial results from these two Mag 7 companies. Ranked second only to NVIDIA Corporation in market capitalization, Alphabet Inc. Class C's parent company Alphabet (GOOGL.US), which has recently surpassed Apple Inc. in market value, will announce its performance in early February. The other two important chip giants, NVIDIA Corporation (NVDA.US), one of the Mag 7, and Broadcom Inc. (AVGO.US), a leader in the AI computing power industry chain that has made significant contributions to the US stock market bull market in recent years, will report their earnings in the last week of February 2026. It is worth noting that a few years ago, the reclassification of the S&P 500 index led many investors to believe that companies considered "tech stocks," such as Amazon.com, Inc. (AMZN.US) and Tesla, Inc. (TSLA.US), were moved to the Consumer Discretionary sector, while tech giants like Alphabet Inc. Class C (GOOGL.US) and Meta (META.US) were classified into the Communication Services sector. This is why the earnings growth trends in the Consumer Discretionary and Communication Services sectors have been second only to the technology sector in recent years, mainly due to the significant contributions of these high-weight tech giants. During a performance conference call a few months ago, the well-known value investment firm Oakmark from Chicago, managed by the US value investment guru Bill Nygren, mentioned that if the S&P 500 index did not reclassify companies like Amazon.com, Inc., Alphabet Inc. Class C, and Tesla, Inc. into other sub-sectors, the broader technology sector's market cap weight in the S&P 500 index today would likely be close to 55%, instead of the current approximately 35%. As of the close of the US stock market on January 16, 2026, the total market capitalization of the top three companies in the S&P 500 index - namely NVIDIA Corporation, Alphabet Inc. Class C, and Apple Inc. - is close to about 20% of the total market cap of the S&P 500 index. The year 2026 in the US stock market has started off well, but a true breakthrough in the bull market is yet to be seen until the financial results and performance guidance from the core companies in the tech sector and large-cap growth companies (the large market value companies centered around the seven major tech giants) are published. Recent signs indicate that market funds are starting to flow into international and emerging markets, as well as US small-cap ETFs like the Russell 2000 Index ETF, as the financial performance and guidance of the Mag 7 companies and the three leading companies in the AI computing power industry chain have not been officially released yet. Although the market rotation is becoming increasingly evident, according to JR Research, an institutional investor who successfully predicted at the end of 2022 that the market value of NVIDIA Corporation would surpass that of Apple Inc., the rotation is not expected to last long. "Around the AI computing power infrastructure construction process and the AI investment theme of the Mag 7 (the seven major tech giants), just like in 2024 and 2025, the full year of 2026 will also be the strongest theme in the global stock market," stated in a report by this institutional investor. JR Research and Trinity Asset Management founder Brian Gilmartin recently released a research report stating that the AI computing power infrastructure and the Mag 7 theme remain at the core. The companies known as the "pickaxes and shovels" of the technology field and the mega-cap tech giants continue to drive long-term value expansion in the market. As highlighted above, the majority of actual value flows towards those large tech companies involved in the development and completion of AI data centers, such as NVIDIA Corporation, Broadcom Inc., Alphabet Inc. Class C, as well as AMD, Micron, etc. Therefore, JR Research stated, "I find it hard to imagine a new leader in this value capture - we are still in the early stages of a trillion-dollar AI investment race." Thus, the market remains in the pricing phase of who truly holds the AI crown. Tony DeSpirito, Global Chief Investment Officer and Fundamental Stock Investment Portfolio Manager at BlackRock, Inc., believes that this is not the "internet bubble-like valuation multiples" of the past. However, this seasoned asset management professional stated that this does not mean that there are no sporadic speculative and irrational exuberance in certain areas, but he does not believe that this exuberance is concentrated on the AI-related targets represented by the "Magnificent Seven." In its annual outlook, JPMorgan indicates that the market trading landscape in 2026 will not be significantly different from 2025, with dominant stocks presenting extreme overcrowding and record concentration of AI giants (i.e., the continued high weight of the US's seven tech giants). JPMorgan believes that the current AI-driven super-investment cycle is the core of its optimistic outlook. This cycle has propelled a record level of capital spending, rapid earnings expansion, and created an "unprecedented" market concentration of AI-benefitting stocks and high-quality growth companies. The report defines these quality companies as ones with strong profit margins, robust cash flow growth, rigorous capital returns, and low credit risk, emphasizing that this technological-driven structural shift is reshaping the market landscape. So, the technology sector remains at the forefront of 2026 US stock market trends, with AI serving as a critical driving force for technology earnings and overall market bullish sentiment. It is expected to continue playing a central role that has been dominant in the market since 2023, indicating that tech stocks are still crucial in determining whether the ongoing US stock market bull run since 2023 will continue in 2026. Their exceptionally strong earnings growth expectations provide vital underlying bullish logic for the entire US market. Although other sectors are expanding, the earnings growth rate, valuation weight, and impact of capital spending in the technology sector make it the most likely leading force to continue leading the market in 2026. Among these, NVIDIA Corporation, Alphabet Inc. Class C, and Microsoft Corporation, with their high weights in the technology sector, contribute the most to earnings growth and have the strongest influence. In 2026, the Mag 7 may continue to epitomize what it means to lead the market. The "Magnificent Seven" of the US stock market - including Apple Inc., Microsoft Corporation, NVIDIA Corporation, Alphabet Inc. Class C, Amazon.com, Inc., Meta Platforms, and Tesla, Inc. - have been the core drivers leading and energizing the entire US stock market during the long-term bull market period since 2023. With strong revenue brought by AI deployment, solid fundamentals, continuous robust free cash flow reserves, and expanding stock buyback programs, these tech giants have attracted capital inflows from around the world. The new round of US stock earnings season has begun, and it is undeniable that the financial performance and guidance of the "Magnificent Seven" as well as the three leading companies in the AI computing power industry chain - Broadcom Inc., AMD, and Oracle Corporation - are crucial in determining the overall earnings and bullish trend of the US stock market. Among the top three companies in market capitalization in the S&P 500 index, two companies - Apple Inc. (AAPL.US) and Microsoft Corporation (MSFT.US) - are set to release earnings in late January 2026. Microsoft Corporation plans to announce its performance on January 28th Eastern Time, while Apple Inc. will release its earnings report on January 29th Eastern Time, so we will have to wait a few weeks to hear the latest financial results from these two Mag 7 companies. Ranked second only to NVIDIA Corporation in market capitalization, Alphabet Inc. Class C's parent company Alphabet (GOOGL.US), which has recently surpassed Apple Inc. in market value, will announce its performance in early February. The other two important chip giants, NVIDIA Corporation (NVDA.US), one of the Mag 7, and Broadcom Inc. (AVGO.US), a leader in the AI computing power industry chain that has made significant contributions to the US stock market bull market in recent years, will report their earnings in the last week of February 2026. It is worth noting that a few years ago, the reclassification of the S&P 500 index led many investors to believe that companies considered "tech stocks," such as Amazon.com, Inc. (AMZN.US) and Tesla, Inc. (TSLA.US), were moved to the Consumer Discretionary sector, while tech giants like Alphabet Inc. Class C (GOOGL.US) and Meta (META.US) were classified into the Communication Services sector. This is why the earnings growth trends in the Consumer Discretionary and Communication Services sectors have been second only to the technology sector in recent years, mainly due to the significant contributions of these high-weight tech giants. During a performance conference call a few months ago, the well-known value investment firm Oakmark from Chicago, managed by the US value investment guru Bill Nygren, mentioned that if the S&P 500 index did not reclassify companies like Amazon.com, Inc., Alphabet Inc. Class C, and Tesla, Inc. into other sub-sectors, the broader technology sector's market cap weight in the S&P 500 index today would likely be close to 55%, instead of the current approximately 35%. As of the close of the US stock market on January 16, 2026, the total market capitalization of the top three companies in the S&P 500 index - namely NVIDIA Corporation, Alphabet Inc. Class C, and Apple Inc. - is close to about 20% of the total market cap of the S&P 500 index. The year 2026 in the US stock market has started off well, but a true breakthrough in the bull market is yet to be seen until the financial results and performance guidance from the core companies in the tech sector and large-cap growth companies (the large market value companies centered around the seven major tech giants) are published. Recent signs indicate that market funds are starting to flow into international and emerging markets, as the financial performance and guidance of the Mag 7 companies and the three leading companies in the AI computing power industry chain have not been officially released yet. Although the market rotation is becoming increasingly evident, according to JR Research, an institutional investor who successfully predicted at the end of 2022 that the market value of NVIDIA Corporation would surpass that of Apple Inc., the rotation is not expected to last long. "Around the AI computing power infrastructure construction process and the AI investment theme of the Mag 7 (the seven major tech giants), just like in 2024 and 2025, the full year of 2026 will also be the strongest theme in the global stock market," stated in a report by this institutional investor. JR Research and Trinity Asset Management founder Brian Gilmartin recently released a research report stating that the AI computing power infrastructure and the Mag 7 theme remain at the core. The companies known as the "pickaxes and shovels" of the technology field and the mega-cap tech giants continue to drive long-term value expansion in the market. As highlighted above, the majority of actual value flows towards those large tech companies