Have Expectations Caught Up to Prices? It Depends

Earnings expectations have caught up with prices for major AI and technology companies, while earnings momentum remains stronger across the rest of the market.

• More than 60% of S&P 500 companies had reported third-quarter earnings by November 4, 2026, including Microsoft, Meta, Amazon and Alphabet.
• Aggregate earnings exceeded Wall Street estimates by only 3.3%, the weakest positive surprise in two years, despite companies still reporting better-than-expected results.
• Investors recently punished Alphabet, Intel and Amazon after signs of slower-than-expected growth in important business areas, even though overall AI demand remains strong.
• S&P 500 companies excluding the Magnificent 7 beat earnings expectations by about 10% on average, indicating that positive earnings momentum has broadened beyond technology and AI.
• The Nasdaq 100 was 9.5% below its all-time high, compared with declines of 3.3% for the S&P 500 and 2.2% for the S&P 500 Equal-Weight Index.

Takeaway: AI and technology stocks now require more selective investment because their results are no longer consistently exceeding elevated expectations, while broader market earnings and equal-weight performance appear more resilient.