Closing the Quarter: Q2'26

Fundamentals continued to improve through the Q2’26 earnings season, with results generally holding up against elevated expectations and supporting a continued upward bias in consensus estimates. Growth remains healthy, although performance is becoming increasingly concentrated in a relatively narrow group of secular and sector-specific themes, while more cyclical and consumer-sensitive areas remain uneven.

Management teams are broadly constructive on the outlook, but investor confidence is increasingly dependent on companies demonstrating their ability to execute against improving second-half expectations in a still-uncertain operating environment. At the same time, accelerating investment spending and higher rates are intensifying competition for capital, requiring companies to balance growth opportunities with traditional shareholder returns such as repurchases.

Against this backdrop, investors remain focused on whether elevated capex can generate sufficient returns, how durable and broad-based AI-driven growth will become, whether companies can deliver on increasingly constructive guidance, and whether earnings and revenue growth can ultimately broaden beyond the current AI-led buildout.

With Q2’26 earnings largely in the books, we “Close the Quarter” with some notable themes:

• Second Quarter Performance: In like a Bear, out like a Bull; after shaking off Iran-war jitters, markets quickly bounced back as the worst-case scenarios failed to materialize
• Price Target Revisions: Strong bank and insurance earnings prints lead to significant upward revisions, while streaming giants and media / telecom providers see large decreases
• Consensus Shifts: Tech, Industrials, and Energy companies all see upward revisions to revenue and EPS estimates, while treatment of consumer-facing sector estimates is more mixed
• Growth Estimates: Tech leads both top- and bottom-line growth expectations
• Company Guidance: Outlooks point to continued top-line momentum; companies remain optimistic as guides strengthen for most sectors, but conservatism is seen behind consumer-facing and rate-sensitive sectors
• Capital Allocation Trade-offs: Companies taking a balanced approach to capital decisions
• Demand for Capital: Net equity issuance turns positive for the first time since 2021, fueled by the resurging IPO market; Capex accelerates further
• IR Strategy: Increasing froth necessitates careful preparation; guidance and second-half visibility dominate top questions, with AI and sector-specific impacts coming in close second