S&P 500 earnings grew 50.4% last quarter. Two stocks did a third.

The S&P 500 just posted its best earnings quarter in five years. With 88% of the index reported, blended earnings for the second quarter of 2026 are up 50.4% from a year earlier, the fastest growth since Q2 2021, when profits rose 91.6%. That's the number in every headline.

Here's the part the headline skips. Take out two companies, Alphabet and Amazon, and the same growth rate falls to 32.0%. Two stocks, out of 500, account for roughly a third of the increase. The record profit margin says the same thing: the index hit a net margin of 16.9%, the highest FactSet has measured since it began tracking the figure in 2009, and a large part of that jump traces to valuation gains at those same two names.

So which number do you own? If you hold an S&P 500 index fund, the answer is both, and it matters which part reverses. Here are three cuts of one quarter: the headline, the two-stock effect, and the broad base underneath that most of the coverage skips.

The headline, and how it got there

On June 30, before most of the index had reported, analysts expected Q2 growth near 23%. It stands at 50.4% now. Earnings seasons usually drift up a few points as real results beat cautious estimates. A move this size is a different animal. It came from a small group of very large companies reporting far above what analysts had modeled.

The beat was broad in one sense. 86% of companies reported earnings above their estimate, against a five-year average of 78%. The size of the surprise was not broad. Across the index, reported earnings came in 29.2% above estimates. Remove Alphabet and Amazon and that surprise shrinks to 10.9%. Most companies beat. Two of them beat by enough to bend the whole average.

Two companies, a third of the growth

FactSet is blunt about it. Excluding Alphabet and Amazon, Q2 growth drops from 50.4% to 32.0%. Little of that came from selling more product. Most of it is valuation gains: mark-to-market increases on investments the two companies hold, which flow through net income even though nothing was sold.

The margin makes it visible. The index net profit margin reached 16.9%, up from 14.8% the quarter before and a record in FactSet's data. Strip out the same two names and it settles at 15.0%, still a record. Two sectors carried much of the widening: communication services reported a 28.5% net margin against 15.2% a year ago, and information technology ran at 31.6% against 25.2%.

These gains are real earnings under accounting rules. They are also the kind that can turn negative next quarter if the holdings fall, which is why reading 50.4% as the health of corporate America overstates it. It's the same trap as reading a revenue line without asking how it's counted. A single number can be accurate and still describe something narrower than it sounds.

The broad base the concentration take misses

The mirror-image mistake is to hear "two stocks" and decide the quarter was hollow. The data doesn't support that either.

Ten of the eleven sectors grew earnings year over year, and eight of them grew double digits, led by energy, communication services, consumer discretionary, information technology, and materials. Earlier in the season, before the mega-caps reported, FactSet flagged that the other 493 companies were tracking 22.8% growth, their strongest since Q4 2021, and that four of the five biggest contributors to index growth were not Magnificent Seven names: Micron, Chevron, Exxon Mobil, and Broadcom. Semiconductor earnings rose about 135%, and technology hardware grew 55%.

So the quarter holds two true statements stacked on each other. The eye-catching 50.4% is top-heavy. The 32.0% underneath it is broad, and by historical standards, strong. Same quarter, two zoom levels.

What it means if you own the index

An S&P 500 fund is cap-weighted, so you already hold more Alphabet and Amazon than almost anything else. The concentration itself isn't news. What this quarter adds is a reason to separate two engines inside the same return.

The first engine is operating strength: more sales, wider margins, 86% of companies beating. That compounds. It's why the broad 32% and the record 15% ex-two-names margin matter more to a long holder than the headline does.

The second engine is valuation gains on a few balance sheets. That's genuine income this quarter and can be a genuine loss the next. When you read "best earnings since 2021," a slice of it is this second engine, and it doesn't carry the same weight.

The practical read is simple. Treat 50.4% as the marketing number and 32% as the operating number. Judge this quarter, and the ones after it, on whether the operating number holds.

What to watch

Two things decide whether this was a peak or a base. First, margins: if the profit margin without Alphabet and Amazon stays near 15% next quarter, the strength was operating, not a one-off mark-up. Second, breadth: if the other 493 keep growing without the mega-caps carrying them, the 32% was the real signal. If both fade and only the two names hold up the average, the headline was the whole story after all.

Sources

• FactSet, S&P 500 Earnings Season Update, August 7, 2026
• FactSet, S&P 500 Reporting Highest Net Profit Margin in More Than 15 Years
• FactSet, Are "Magnificent 7" Companies Still Top Contributors to S&P 500 Earnings Growth for Q2?
• 24/7 Wall St., Even Without Alphabet and Amazon, the S&P 500 Just Posted Its Biggest Earnings Beat Ever, August 8, 2026

This is not financial advice.