{"id":26315,"date":"2026-02-12T07:30:00","date_gmt":"2026-02-12T12:30:00","guid":{"rendered":"https:\/\/jeffclarktrader.com\/market-minute\/?p=26315"},"modified":"2026-02-11T12:22:28","modified_gmt":"2026-02-11T17:22:28","slug":"seven-stocks-cashing-in-on-the-ai-boom","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/seven-stocks-cashing-in-on-the-ai-boom\/","title":{"rendered":"Seven Stocks Cashing in on the AI Boom"},"content":{"rendered":"

Roughly two-thirds of S&P 500 companies have now reported their latest quarterly results, and once again they’re beating expectations.<\/p>\n

That’s the good news. The potential bad news is that it’s just a handful of companies that account for all the profit growth.<\/p>\n

Plus, we’re getting closer to “as good as it gets<\/em>” for future S&P 500 earnings growth.<\/p>\n

First, let’s look at the results.<\/p>\n

With 293 S&P 500 companies having reported earnings so far, 77% have beaten analyst estimates, and by an average of 7.6% above forecasts.<\/p>\n

The results are on track for +13% earnings growth year over year for the S&P 500.<\/p>\n

On the other hand, just five of the 11 S&P 500 sectors are reporting increased net profit margins, which is the real bottom line. Another four sectors have shrinking profit margins, while two have flat margins.<\/p>\n

And I bet you can guess which sector is doing ALL<\/em> the heavy lifting in terms of both profit growth and margin expansion… you guessed it, technology.<\/p>\n

Tech sector profit growth alone is on track to jump more than 30% year over year.<\/p>\n

Profit margins are tracking a 29% growth rate, compared to just 13.2% for the S&P 500 overall.<\/p>\n\n

\"\"<\/figure>\n\n

Excluding the tech sector’s $139 billion in quarterly profits, S&P 500 earnings growth would be negative<\/u><\/em> year over year.<\/p>\n

And as you can see in the chart above, the profit story doesn’t get any less lopsided for 2026 results either.<\/p>\n

    \n
  • Wall Street’s earnings estimate for full year 2026 is up just 3% for the S&P 500 overall since April 2025.<\/li>\n
  • Meanwhile, the Mag 7 stocks have witnessed a 12% increase in expected 2026 profits, or four times<\/em><\/li>\n
  • There has been NO<\/em> increase in expected earnings for the rest of the S&P 493 (ex-Mag 7<\/em>).<\/li>\n<\/ul>\n

    In other words, earning growth prospects are as flat as a pancake for the average stock in the index.<\/p>\n

    This tells me that investors simply aren’t buying into the “AI will magically transform everything<\/em>” story.<\/p>\n

    Sure, big tech stocks are capitalizing on the AI craze, at least for now. But they are also spending ever increasing sums to buy that growth, estimated at about $2 billion per day<\/em> in capital investment.<\/p>\n

    That’s on track for a staggering $650-$700 billion this year alone.<\/p>\n

    Folks, that’s more than 10 times<\/u><\/em> what the US spent to put a man on the moon during the 1960s and early ‘70s!<\/p>\n

    Meanwhile, AI-generated profits outside<\/em> of the tech sector, for the rest of the S&P 500, are proving to be elusive at best.<\/p>\n

    So far, Mag 7 stocks are hitting paydirt, and it shows in their bottom line. But those results may be as good as it gets, or very close to it.<\/p>\n

    Meanwhile, what about the rest of the S&P 500 stocks; when (if ever<\/em>) does the promise of AI riches hit the bottom line for these companies?<\/p>\n

    Good investing,<\/p>\n

    \"Signature\"<\/p>\n

    Mike Burnick
    \nContributing Editor, Market Minute<\/em><\/p>\n\n","protected":false},"excerpt":{"rendered":"

    Tech sector profit growth alone is on track to jump more than 30% year over year.<\/p>\n","protected":false},"author":100,"featured_media":0,"comment_status":"closed","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-26315","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/26315","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/100"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=26315"}],"version-history":[{"count":1,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/26315\/revisions"}],"predecessor-version":[{"id":26321,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/26315\/revisions\/26321"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=26315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=26315"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=26315"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=26315"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=26315"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=26315"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=26315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}