US companies reported strong earnings in Q3 due to demand for AI infrastructure and a resilient consumer. Analysts see no supply-demand mismatch despite AI overbuilding concerns. Future consumer spending and earnings could be impacted by a weakening labor market or tariffs. Earnings growth for Q3 is expected to be 13%, up from 8% in the summer. Over 80% of companies exceeded analysts’ expectations, with positive earnings surprises comparable to the covid reopening period. AI continues to grow, with tech firms investing billions in AI infrastructure. The IT sector of the S&P 500 is expected to grow earnings by 27% YoY in Q3. Consumer spending remains strong, supported by Visa, Mastercard, and major banks. However, potential tariff impacts could weaken consumer spending in the future. Analysts anticipate 10% profit growth for the S&P 500 in 2025, with risks tilted towards future gains. In the third quarter, US companies posted strong earnings due to high demand for AI infrastructure and resilient consumers. Analysts are not worried about overbuilding in the AI sector.

However, a weakening labor market and pressure from tariffs could impact consumer spending and future earnings.

Read more at Morningstar.: 3 Takeaways from the Strong Q3 US Earnings Season