The U.S. third-quarter earnings season is in full swing, with more companies returning to earnings growth. Earnings beats are at their highest level in at least 16 years, with small-cap companies also seeing a recovery in profits.

AI continues to dominate earnings growth across all market caps, with the tech sector driving most of the growth. Despite concerns of concentration, earnings in the top 10 companies are now rising faster than stock prices.

AI spending is not only boosting U.S. indexes but also adding to economic activity. Estimates show AI investment accounting for 92% of GDP growth in the first half of 2025, with data center construction matching office spending.

The scale of AI investment compared to historic infrastructure cycles raises questions about its potential payoff. Even a modest 10% increase in productivity from AI could add $3 trillion to the U.S. economy, outweighing the costs of current investments.

Read more at Nasdaq: Third-Quarter Earnings Are Surprisingly Good