Big Tech just carried the whole earnings season

The index is flexing... but mostly in one room

Wall Street came into first-quarter earnings expecting a slowdown. Instead, the S&P 500 is tracking 27.1% year-over-year profit growth with 63% of the index reported — more than double the 13.1% analysts were expecting at quarter-end.

That sounds like a victory lap. But zoom in and you’ll see the equivalent of three people carrying the couch while everyone else just gives motivational quotes.

• Alphabet, Amazon, and Meta accounted for 71% of the net dollar increase in S&P 500 earnings over the past week
• Communication Services flipped from a 3.8% decline to 53.2% growth
• Consumer Discretionary jumped from 1.7% growth to 39%

The fine print is doing a lot of the heavy lifting

The headline beat looks even shinier because some of it came from one-time accounting boosts. Alphabet booked a $37.7 billion gain tied to equity securities, Amazon got a $16.8 billion pre-tax boost from its Anthropic stake, and Meta’s results included an $8.03 billion tax benefit.

In other words: yes, the numbers are huge. No, they are not all the same kind of huge.

Goldman Sachs says the aggregate EPS growth rate is still around 16% even excluding those idiosyncratic benefits, which is solid. But it’s also a reminder that when a handful of megacaps have an epic quarter, they can make the whole market look like it’s gliding downhill on a fresh coat of optimism.

Why investors should still care

The weird part? Stock rewards for beats have been pretty tame. Companies that topped estimates have only outperformed by 20 basis points the next day, while misses have been punished harder than usual.

That tells you the market is still in “show me more” mode. And with Nvidia set to report on May 20, plus consumer retailers still coming through, the next few weeks will decide whether this is a real earnings boom or just a megacap highlight reel.

Big picture: the quarter looks strong, but the market is still checking the receipts.