Stock Talk - 1q26 Earnings Season and AI Capex Cycle Updated

Episode Date: May 8, 2026

I’m breaking down the latest Q1 2026 earnings season update and why the AI capex boom may still have room to run. I cover accelerating S&P 500 earnings, record profit margins, rising EPS estimates, and how today’s cycle compares to the late-1990s Dotcom capex run. I also explain why higher oil prices and interest rates remain headwinds, but not roadblocks, when earnings growth is this strong.   In this Stock Talk, I bring the focus back to what has historically mattered most for stock prices over time: earnings. While headlines, geopolitics, oil prices, and Federal Reserve policy can create short-term volatility, I walk through current FactSet earnings data showing that many S&P 500 companies are reporting positive earnings and revenue surprises, profit margins remain strong, and leadership is concentrated in areas like technology, materials, financials, and industrials. I also explain why forward earnings estimates may suggest continued acceleration in revenue and EPS growth through 2026, while reminding investors that estimates can change and should not be treated as guarantees. The key takeaway is simple: in uncertain markets, it may help to stay disciplined, diversified, and focused on the underlying fundamentals that can drive long-term stock performance.   About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer: As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week. He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).   Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy with a little education thrown in for good measure. Listen each week and help stay connected to your money!   Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free visit: https://click2retire.com/lets-connect   Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. References to third-party analysts should not be seen as an endorsement of their views or recommendations, and you should do your own research before investing. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.

Okay, investors this week, first quarter earning season, an AI CAPEX cycle. We're going to update all the data from last week. We're going to combine a few stock talks into one episode. That leaves us right here. It's an AI agenetic CAPX boom acceleration. So far, oil is up 50 to 75% since they ran war began, and the markets shook it off. Interest rates are running higher since the war began, and inflation is running higher. But the market shook it off. And yes, the S&P 500 is hitting all-time highs. Both of these things were headwinds, but not roadblocks to the markets. Why? Because the S&P 500 earnings are booming. Much like a previous KappX cycle over 25 years ago. Yes, even earnings growth rates looked familiar to the 1997.2,000. CapEx run. But investors, even if we are reliving the past, there would still be room to run because,

earnings matter more right now than the headwinds of higher oil or higher interest rates at these levels. With more companies reporting earnings, let's update last week's piece and go back to what really drives prices over time. Earnings and earnings growth rates. Not headlines, not geopolitics, not even the Federal Reserve most of the time. Once again, the data we're using is from FACCET earnings insight. They've updated their data and here's the first chart on the 12-month forward S&P 500 earnings first, the S&P 500 price. Price follows earnings, and right now reported earnings are accelerating sharply. We are now two-thirds of the way through earnings season, and the data just changed meaningfully, in a good way.

It just stepped up functionally higher, meaningfully. First quarter earnings go far, a blowout. As of this filming, about 63% of companies have reported, 84% beating earnings, 81% beating revenue. earnings surprise 20.7%, which is the highest level since 2021 when we were exiting COVID lockdowns and expanding on massive fiscal and spending recovery. S&P 500 earnings growth now at 27.1% as far as earnings changes. Here's this historical year-to-year earnings growth rate the last three years. Bottom lines, investor, this is not slow, steady growth.

This is a breakout earnings quarter. Where did the growth come from exactly? at the company level, the surprises reported by Alphabet, Amazon, and META were the largest contributors to the increase in earnings for the first quarter last week. Combined, these three companies accounted for a massive 71% of net dollar level increase in earnings of the S&P 500 in the first quarter. These are the largest companies in the world, beating revenue, beating earnings estimates, and accelerating growth rates. Alphabet, by itself reported a positive earning surprise 90% for the first quarter, quarter compared to this five-year average of 12.5%. Yes, some of that were one-time gains for

their venture capital portfolio. Amazon reported a positive surprise above 70% for the first quarter, and Meta Platforms reported a positive earning surprise at 56%. In the first quarter, record profit margins as well, new record highs. Net margins, 14.7%, the highest ever recorded, up sharply from 13.2% in the fourth quarter with tech, nearer. 30% margins and communication services like Google expanding fast. Probably because the Big Beautiful Bill and its accelerated depreciation schedule for some of this expansion. Bottom line, earnings growth is being driven by both revenue and margin expansion. As far as looking forward, the outlook is high and still accelerating.

For the second quarter, analysts are projecting earnings growth of 21.3% and revenue growth, 11%. Third quarter, analysts projecting earnings growth at 23% and revenue growth 9.7. Fourth quarter, analysts are projecting a little bit of a slow down 20.6 and revenue growth 9.3. For the whole year, analysts are projecting earnings growth at 20.6 and revenue 9.7. Full year growth now, 20% plus estimates rising, not falling. Bottom line, analysts are raising estimates very quickly, which is unusual this early in a quarter. So investors, I have to curb your enthusiasm a bit now looking out to those numbers to say way out in the fourth quarter of the year after growth is supposed to peak in the third quarter. Many strategists are now saying that the current earnings growth rates and revisions are unprecedented. Unfortunately, they're not.

Yes, they usually happen coming out of recession. However, they have occurred during expansions as well. Once again, I'm going to take you way back in the way back machine to the dot-com cycle in 97 through 2000. Here's the table of the year-to-year quarterly earnings growth rate for the later half of dot-com. Look at the table for a second and tell me the S&P 500 peaked during dot-com. You looked at those 26 and 22% year-to-year earnings growth rates in the second and third quarter 2000. It said sometime then you would have been wrong because the S&P 500 peaked during dot com. The last week in March 2000, right before earnings growth rate peaked at over 32.75%.

You stuck around after that. You would have not been rewarded even though earnings growth grew at mid-20s, and that was against positive earnings comps. The good news, while the NASDAQ peaked and broke hard and fast in 2000, the S&P 500 meandered lower slowly for much of 2000 before succumbing lower in 2001. Once again, I'm bringing back the overlay of one of the most cyclical growth areas of the stock market. That area, semiconductor equipment manufacturing. These companies make the equipment that make the equipment that make semi-chips we all use in everyday life, as well as the leading-edge semis used for AI training and inference being used in newer data centers. Here's that overlay once again, current AI cycle first.com. Investors, having invested in technology for most of my career, including before, during, and after the dot-com run in 97 through 2000, I have never seen a semiconductor cycle

end before orders and equipment companies accelerate for three to four quarters minimum. First quarter 26 was the first quarter we saw a pickup in orders, X-China, and semi-equipment supply chain. It's tough to have a peak semi-cycle before additional capacity starts to ram. At least that's my experience. For now, investors, stay focused on what matters, earnings orders, revenue growth, margins, keep your eyes on the prize. In this market, while higher oil has been a headwind and higher interest rates are another headwin, earnings are just as important. They are almost everything. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed.

The views and opinions expressed herein may change. without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment, and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing, involves the risk of loss and past performance is not indicative of future results.