Global earnings growth has been strong this year, led by the U.S. and reinforced by improving profit growth across Europe, Japan and other major markets. While volatility may rise in the near term, above-average earnings and broader global participation remain supportive of global equities.
This year has been notable for the strength of global earnings growth. In the U.S., S&P 500 earnings are expected to rise 31.5% in 2026, up sharply from 13% in 2025. The story does not end there. Earnings growth has improved meaningfully across Europe, Japan and other major markets, with each region expected to deliver profit growth well above last year’s pace.
Though global earnings momentum is likely to slow in 2027 from this year’s unusually strong levels, growth may still remain above historical averages. That should matter for markets, especially as the earnings story has broadened beyond a narrow group of U.S. stocks. Corporate margins continue to rise, and while artificial intelligence-related capital spending has been a major driver of growth, the broader market remains fundamentally solid.
We do expect volatility to increase as markets contend with a range of uncertainties, including higher U.S. Treasury yields, the approaching midterm elections and ongoing geopolitical tensions. Still, we view the combination of above-average earnings growth and broad-based global participation as a clear positive for the forward outlook for global equities. After all, earnings growth remains the key driver of long-term market returns. We therefore remain constructive.
