“Mag 7” Now Reporting Lower Earnings Growth Than the Other 493 S&P 500 Companies for Q3

With Alphabet, Amazon.com, and Microsoft reporting actual results for Q3 2026 during the past week, 5 of the 7 companies in the “Magnificent 7” have now reported earnings for the third quarter. How have earnings reported by the “Magnificent 7” companies to date performed relative to analyst expectations and year-ago results?

On September 30, the estimated earnings growth rate for the “Magnificent 7” companies for Q3 2026 was 33.6%. Overall, 40% (2 out of 5) of the “Magnificent 7” companies have reported a positive EPS surprise to date, compared to 82% for all S&P 500 companies. Earnings reported by the “Magnificent 7” companies have fallen short of estimates by 14.7% in aggregate, while earnings reported by all S&P 500 companies have exceeded estimates by 1.9% in aggregate.

As a result of this subpar performance relative to expectations to date, the blended (combines actual results for companies that have reported and estimates for companies yet to report) earnings growth rate for the “Magnificent 7” companies has declined to 22.6% today from 33.6% on September 30.

On the other hand, the blended earnings growth rate for the other 493 S&P 500 companies has increased to 32.6% today from 27.8% on September 30. Thus, the blended earnings growth rate for the “Magnificent 7” companies for Q3 2026 (22.6%) is now lower than the blended earnings growth rate for the other 493 S&P 500 companies for Q3 2026 (32.6%).

If these results hold until the end of the earnings season, this will mark the first time the “Magnificent 7” companies have reported lower earnings growth than the other 493 S&P 500 companies since Q4 2022 (-30.6% vs. 1.6%).

However, it should be noted that EPS reported on a GAAP 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. The (GAAP) EPS actual for Alphabet for Q3 2026 included a loss of $8.7 billion in other income due to net losses on equity securities. The year-ago (GAAP) EPS actual for Amazon.com for Q3 2025 included pre-tax gains of $9.5 billion in non-operating income from investments in Anthropic. The (GAAP) EPS actual for Meta Platforms for Q3 2026 included a $9.89 billion charge related to a litigation agreement. All three companies reported actual (GAAP) EPS for Q3 2026 that was below the mean EPS estimate of the analysts.

While all publicly traded U.S companies report EPS on a GAAP (generally accepted accounting principles) 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.

Apple and NVIDIA are the only two “Magnificent 7” companies that have not reported actual earnings for Q3 2026 as of today. Apple is scheduled to report results for Q3 on November 2, while NVIDIA is scheduled to report results for Q3 on November 17.

Looking ahead, analysts also expect the “Magnificent 7” companies to report lower earnings growth than the other 493 S&P 500 companies in Q4 2026 (22.6% vs. 30.8%).

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