AI profits and strong revenues support Wall Street when tariff issues remain

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The company’s results, including more than half of reported second-quarter revenue and stocks close to record highs, have reassured investors about the artificial intelligence trade that has energized Wall Street, even if tax payments buy.

LSEG data shows that as of Thursday, 297 S&P 500 companies were estimated at 9.8% year-on-year revenue growth in the second quarter, up from the estimated growth of 5.8% on July 1.

Next week, investors will peer into the revenues from Dow Jones’ constitutional industrial average Constitutionalists Disney, McDonald’s and Caterpillar to see the broader economy. These companies’ strong profit reports can rely on fresh peaks, pushing the Dow and shy and shy of the record highs in December.

Approximately 81% of companies have beaten analysts’ expectations for revenues above the average of 76% over the past four quarters.

“The revenue season is clearly better than expected,” said Art Hogan, chief market strategist at B. Riley Wells in Boston.

The strength of the company’s revenues is particularly comforting for investors after the clashing sentiment was gained in the last quarter due to the twin threat of tariffs and concerns over flagging economic growth.

“The first quarter was a little more mixed and there was some suspicious economic data… I think it gave the market some pause,” said Tim Grisky, senior portfolio strategist at Ingalls & Snyder in New York.

“But it appears the second quarter was just a turnaround,” Grisky said.

The strength of the outcome of names linked to the AI trade — an investment paper that says that AI is the transformational force driving a significant portion of future economic growth and corporate profits — is particularly encouraging, investors and analysts said.

“Overall, it was megacap, growth/technology/AI that was driving a lot of the outcome,” says Ghriskey.

“This is where we want to be public from a corporate perspective… We are on our biggest stock exposure and we are comfortable there.”

Trade came into rough waters earlier this year as the emergence of Chinese-established artificial intelligence startups rattle investors and robbed concerns that could disrupt the dominance of established technology giants at the heart of AI trade, including NVIDIA.

The powerful results of Microsoft and Meta platforms have reassured investors that large-scale bets on AI are paying off.