“Mag 7” and Other 493 S&P 500 Companies Are Reporting Highest Earnings Growth Since 2021

With NVIDIA reporting actual results for Q1 on May 20, all the companies in the “Magnificent 7” have now reported earnings for the first quarter. How did the earnings reported by these seven companies perform relative to analyst expectations and year-ago results?

On March 31, the estimated earnings growth rate for the “Magnificent 7” companies for Q4 was 22.5%. Overall, 100% (7 out of 7) of the “Magnificent 7” companies reported a positive EPS surprise, compared to 84% for all S&P 500 companies. In aggregate, earnings reported by the “Magnificent 7” companies exceeded estimates by 32.5%, compared to 16.6% for all S&P 500 companies.

As a result, the “Magnificent 7” companies reported actual earnings growth of 63.2% for the first quarter, which is the highest earnings growth rate reported by these seven companies since Q2 2021 (89.2%). On the other hand, the blended earnings growth rate for the other 493 S&P 500 companies for Q1 is 17.4%, which is also the highest earnings growth rate reported by this group of companies since Q4 2021 (32.3%).

Overall, four of the “Magnificent 7” companies are among the top five contributors to earnings growth for the S&P 500 for the first quarter: NVIDIA, Alphabet, Amazon.com, and Meta Platforms. Micron Technology is the only company outside of the “Magnificent 7” companies that is a top 5 contributor to earnings growth for the S&P 500 for the quarter.

It is important to note that EPS reported on a GAAP (generally accepted accounting principles) basis by Alphabet, Amazon.com, and Meta Platforms was used for both the earnings surprise and the earnings growth rate calculations, as the majority of analysts contributing EPS estimates to FactSet for these three companies are providing EPS estimates on a GAAP basis. Alphabet, Amazon.com, and Meta Platforms historically have only reported EPS numbers on a GAAP basis.

It is interesting to note that all three companies highlighted items in their Q1 earnings releases that had a positive impact on GAAP earnings for the quarter. The (GAAP) EPS actual for Alphabet for Q1 2026 included a net gain of $37.7 billion primarily due to net unrealized gains on non-marketable equity securities. The (GAAP) EPS actual for Amazon.com for Q1 2026 included pre-tax gains of $16.8 billion included in non-operating income from investments in Anthropic. The (GAAP) EPS actual for Meta Platforms for Q1 2026 included an $8.03 billion income tax benefit. Meta Platforms also stated that EPS excluding the tax benefit for the first quarter would have been $3.13 lower.

On the other hand, EPS reported on a non-GAAP basis by NVIDIA and Micron Technology was used for both the earnings surprise and the earnings growth rate calculations, as the majority of analysts contributing EPS estimates to FactSet for these two companies are providing EPS estimates on a non-GAAP basis. NVIDIA and Micron Technology historically have reported EPS numbers on a both a GAAP basis and a non-GAAP basis. NVIDIA reported lower non-GAAP EPS ($1.87) than GAAP EPS ($2.39), while Micron Technology reported higher non-GAAP EPS ($12.20) than GAAP EPS ($12.07).

While all publicly traded U.S companies report EPS on a GAAP basis, many U.S. companies also choose to report EPS on a non-GAAP basis. There are mixed opinions in the market about the use of non-GAAP EPS. Supporters of the practice argue that it provides the market with a more accurate picture of earnings from the day-to-day operations of companies, as items that companies deem to be one-time events or nonoperating in nature are typically excluded from the non-GAAP EPS numbers. Critics of the practice argue that there is no industry-standard definition of non-GAAP EPS, and companies can take advantage of the lack of standards to exclude items that (more often than not) have a negative impact on earnings to boost non-GAAP EPS.

Looking ahead, the estimated earnings growth rates for 2026 for both the “Magnificent 7” companies (34.9% vs. 24.3%) and the other 493 S&P 500 companies (17.9% vs. 14.7%) are higher today compared to March 31, as analysts have increased full-year EPS estimates for both groups of companies in aggregate. 

The FactSet Earnings Insight report is being published one day early this week on May 21. The next edition of the report will be published on May 29. 

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