AI Supports 25% Profit Growth: Analysis of Structural Differentiation and Concentration Risk in U.S. Stocks by 2026

In the first half of 2026, the U.S. stock market is nearing the finish line of the period, showing an increasingly clear two-layer structure. On one hand, the S&P 500 Index continues to climb, driven by growth in corporate earnings; on the other hand, the biggest contributors to that growth are becoming more concentrated among a handful of AI-related companies. By June 2026, the overall forecast for earnings growth for the S&P 500 has been materially raised, but the growing degree of internal divergence within the market—and the concentration risk that follows from it—has started to attract increasing attention.

Growth Engine: Upward Revisions to S&P 500 Earnings and Internal Divergence

Since early 2026, multiple mainstream financial institutions have raised their expectations for full-year earnings growth for the S&P 500. In its outlook report released in mid-2026, Charles Schwab raised its estimate of the full-year earnings growth rate to 25%. At the same time, Goldman Sachs lifted its year-end target price for the S&P 500 to 8,000 points. Its core rationale is the corporate earnings growth trajectory, and it expects EPS to rise to about $309 in 2026. The analysis team at JPMorgan Chase further pointed out that the S&P 500’s earnings growth rate in 2026 is roughly around 22%, and suggested that, under an optimistic scenario, the index could reach 9,000 points by mid-2027.

However, beneath this overall number lies substantial divergence in internal structure. According to UBS analysis, the earnings growth forecast for technology-related sectors within the S&P 500 in 2026 is about 20.5%, roughly in line with the “Magnificent Six” at around 21.7%, while the earnings growth forecast for non-technology-related areas is only around 10%. In other words, the growth pace of the technology sector is about twice that of the non-technology sector. By further examining the dynamic distribution of upward revisions to earnings forecasts, it becomes clear that the upward momentum is also highly concentrated in a small number of companies. Evercore ISI data shows that, among the upward revisions to the S&P 500’s overall earnings forecast for 2026, more than 40% comes from three companies: Micron Technology, NVIDIA, and Alphabet. From the revenue side, the S&P 500’s overall revenue growth is around 10%, but profit growth is clearly higher than revenue growth. The main reason is that operating profit margins have been pushed to historical highs—In the first quarter of 2026, the blended net profit margin reached 13.4%, the highest level in 15 years. Key drivers of margin expansion include productivity gains driven by AI and cost control by companies in a constrained labor environment. This means that roughly half of profit growth is not driven by revenue growth, but by margin improvement—this growth pattern itself carries higher sustainability risk.

From the perspective of industry distribution, communication services (centered on Alphabet) and information technology (represented by semiconductor companies such as Micron, Intel, Broadcom, etc.) are the two main engines of earnings growth. Market expectations for overall earnings in 2026 are indeed gradually broadening, but as multiple investment banks have pointed out, the concentrated revisions to earnings forecasts are unlikely to naturally fade away in the short term. The ongoing expansion of AI-related capital expenditure is the core thrust behind this round of growth. The payback cycle and changes in marginal returns from these investments will largely determine the sustainability of earnings growth in the second half of the year.

Concentration Risk: When the S&P 500 Becomes “Individual Stocks”

The high divergence in earnings growth is not only reflected in companies’ income statements, but also more directly evident at the index weighting level. As of June 2026, the combined weight of the top ten constituents of the S&P 500 Index has been approaching 40%, again setting a record high. Torsten Slok, Chief Economist at Apollo Global Management, bluntly said that the S&P 500 Index “is no longer a diversified index.” This judgment is not an exaggeration—the profit share of the top ten companies has nearly doubled since 1996, and the U.S. stock market is increasingly being dominated by fewer and fewer mega-cap firms.

The rise in weight concentration is driven jointly by multiple factors: rapid expansion in profits and revenue among a handful of tech and semiconductor companies; market funds—especially passive ETFs—continuing to flow toward large-cap stocks; and investors’ ongoing long-term expectations for AI-related themes and high-gross-margin businesses that keep pushing valuations higher. As of June 2026, the top ten companies by weight are, in order: NVIDIA (8.24%), Apple (6.78%), Microsoft (4.86%), Amazon (4.20%), Alphabet Class A (3.68%), Broadcom (3.21%), Alphabet Class C (2.93%), Meta (2.10%), Tesla (1.90%), and Berkshire Hathaway (1.38%). Notably, NVIDIA alone accounts for about 8% of the S&P 500 Index’s weight, meaning every movement in its share price can produce a disproportionate amplification effect on the index.

The reallocation of industry weights also reflects this trend. The combined weight of the three major sectors—Information Technology, Communication Services, and Consumer Discretionary (with the first two closely tied to AI themes)—now accounts for about 60% of the S&P 500, whereas before the release of ChatGPT, that figure was only 39%. The S&P 500 is shifting from a market index representing the overall U.S. economy to a thematic index centered on a few technology giants.

The risk brought by this kind of concentration is structural. When the market pulls back, higher concentration magnifies systemic risk: negative news or valuation adjustments for a few companies can lead to sharp volatility at the index level, reducing the effectiveness of the S&P 500 Index as a tool to “represent the overall economy.” The market turmoil caused by mega-cap stock fluctuations in the fourth quarter of 2025 and the first quarter of 2026 has already provided a warning.

Valuation Fragility: Extremely Low Equity Risk Premium

Along with concentration risk, fragility signals are emerging on the valuation front. The equity risk premium (Equity Risk Premium, ERP)—the excess return investors gain from stock investments relative to risk-free assets such as U.S. Treasuries—is a key metric for measuring the market’s valuation safety margin. According to the Federal Reserve’s Financial Stability Report published in May 2026, the current ERP has fallen to 2.7%, down sharply from the historical median of 4.6% since 1991, approaching the lowest level in about two decades.

More specifically, the forward yield of the S&P 500 Index is about 4.7%, while the yield of 10-year Treasury Inflation-Protected Securities (TIPS) is close to 2.0%. The difference of 2.7% is the additional compensation investors receive for bearing stock market risk. From a historical perspective, this level is nearing the critical zone just before the ERP fell to negative values during the dot-com bubble around 2000.

There is disagreement in how the market interprets this signal. Optimists believe that large-scale investments driven by AI have brought rapid growth in earnings, which inherently increases the attractiveness of stocks; therefore, a lower ERP is a reasonable pricing response—the market is merely pricing in a “new productivity improvement cycle.” Pessimists’ logic is also not to be ignored. A 2.7% risk premium means the valuation advantage of stocks over safe bonds has been squeezed to an extreme. If AI-driven earnings growth deviates from expectations—whether due to lower capital expenditure return rates or changes in the macro environment—the market with elevated valuations could face substantial room for correction. If high-growth AI-related company earnings slow down temporarily, the market may experience a relatively sharp valuation compression at the current premium level.

From the perspective of capital allocation, a low ERP may also trigger rotation of funds from stocks to bonds. When returns from safe assets approach the risk-adjusted yields of stocks, the rebalancing motivation of some conservative allocation funds will gradually strengthen.

Key Variables for the Mid-Term Outlook

Based on the analysis above, the direction of the U.S. stock market in the second half of 2026 will depend on the interaction of three key variables.

The breadth of earnings growth is the first variable. Whether earnings growth outside the tech sector can improve in the second half of 2026 or in 2027 will directly determine the market’s resilience. UBS expects that productivity gains brought by AI applications may drive an improvement in earnings breadth in the second half of 2026 and into 2027. But if this expectation is delayed in being realized, the market’s fragility will concentrate in a small number of companies.

AI capital expenditure efficiency is the second variable. In 2026, AI-related capital expenditure by hyper-scale cloud service providers is expected to exceed $500 billion. The marginal return rates of these investments will determine the sustainability of future earnings growth, and also constitute one of the core assumptions behind current market pricing. If return rates show signs of expected deterioration, overall earnings growth will face downward pressure.

Uncertainty in the macro environment is the third variable. Factors such as the direction of tariff policies, a moderate slowdown in the labor market, and inflation persistence continue to affect corporate costs and the structure of consumer spending. The analysis team at Charles Schwab believes political volatility is one of the “least adequately priced risks” in the current market. Changes in these external factors could, inadvertently, become triggers for a shift in market sentiment.

Gate U.S. Stock Trading: Building Multi-Asset Allocation Amid Structural Divergence

For users who want to participate in U.S. stock investing in the current market environment, flexible multi-asset allocation tools have become increasingly important. Against the backdrop of structural divergence between tech themes and traditional sector structures, diversifying to mitigate single-market risk and gradually expanding the dimensions of allocation have become key considerations for investors.

On June 1, 2026, Gate officially launched real stock trading services. Unlike tokenized stocks or CFD products commonly seen on traditional crypto platforms, Gate’s service connects with a licensed U.S. Broker-Dealer and clearing broker, Alpaca, enabling users to directly buy real U.S. stocks and ETFs within the platform.

In terms of product coverage, Gate U.S. spot stock trading supports more than 10,000 stocks and ETF products listed on major U.S. exchanges—including the New York Stock Exchange (NYSE) and Nasdaq. Users do not need to exchange currencies; they can complete buying and selling directly using USDT. The minimum trading threshold is 0.01 shares (approximately $1 to start).

What deserves special attention is the position-holding cost mechanism. Unlike the platform’s stock CFD products, spot U.S. stock trading involves no funding rates, swap fees, or overnight position-holding charges. For allocation-oriented users who prefer to hold long term and enjoy shareholder rights, this is an important cost advantage. In addition, if the underlying company issues dividends during a user’s holding period, dividends will be automatically distributed to the account in USDT.

For users who want to participate in the 2026 AI structural trend, Gate’s U.S. stock products offer a direct path to investing in AI concept stocks. From semiconductor companies such as NVIDIA and Micron Technology, to cloud computing giants such as Alphabet and Microsoft, users can complete combined allocations of crypto assets and U.S. spot stocks within a familiar all-in-one platform interface, without needing to switch accounts and fund systems across multiple platforms.

Gate U.S. spot stock trading is currently open to eligible users. Users can enter the stock section via the TradFi section on the Gate website or in the Gate app, transfer USDT to their stock account, and then start trading. For specific trading rules and accessible underlying products, please refer to the relevant pages on the Gate platform.

Conclusion

The key characteristics of the U.S. stock market in the first half of 2026 can be summarized as follows: beneath a macro backdrop of high growth lies a highly divergent microstructure. While the S&P 500’s earnings growth is moving forward under optimistic expectations of 25%, its growth pillars are concentrated in two sectors—Communication Services and Information Technology—where the top ten constituents already account for nearly 40% of the index’s weight. At the same time, the extreme narrowing of the equity risk premium indicates that the market’s reliance on “perfect” pricing has reached nearly the highest level in two decades. In such a structural environment, regardless of the allocation strategy adopted, understanding the essence of concentration risk and the deep logic behind valuation fragility is a necessary prerequisite for making rational judgments.