Alphabet’s unrealized SpaceX gains lift S&P 500 blended margin to 15.7%, masking concentration risks in top 10 firms.
The S&P 500 is poised for its 10th consecutive quarter of earnings growth, with 86% of reporting companies surpassing EPS estimates. Blended margins surged to a record 15.7%, driven by Alphabet’s 93.6% margin, inflated by unrealized gains from its SpaceX stake.
Early Q2 results show the top 10 S&P 500 firms now account for 34% of index profits, nearly double their share in the mid-1990s. While AI-driven revenue growth and cost discipline bolster earnings, the concentration in a handful of companies raises concerns about sustainability.
Despite strong headline numbers, the reliance on a few high-margin outliers highlights potential vulnerabilities in the broader earnings recovery.