U.S. companies are delivering a strong earnings season, but investors remain unimpressed. Firms that surpassed analyst expectations are failing to see the usual stock price boost.

According to Goldman Sachs, investors are shifting focus from stellar reported results to more uncertain future prospects—particularly whether massive AI investments will translate into actual profits. This caution has disrupted the historical pattern of "earnings beats leading to stock rallies."

Recent data shows about two-thirds of S&P 500 companies that reported results exceeded expectations, driving Q3 earnings growth to 8% year-over-year, above the prior 6% forecast. Yet post-earnings, these stocks outperformed the S&P 500 by just 32 basis points on average—far below the typical 98-basis-point historical premium.

Goldman’s portfolio strategy team, led by David Kostin, notes that amid ongoing U.S.-China trade volatility and regional banking concerns, investors are scrutinizing future profitability more than ever. In other words, the market’s question has shifted from "how well did you do?" to "how well will you do?"

**A Disconnected Earnings Season: Strong Results Fail to Lift Stocks** This earnings season has been exceptional. Goldman highlights that ~66% of reporting S&P 500 firms beat estimates, making it one of the strongest quarters this century—second only to post-pandemic Q4 2020. Notably, growth was driven by both sales and margins.

Yet market reactions have been muted. Stocks that beat earnings showed weaker post-announcement outperformance versus historical trends. Goldman suggests investors may have anticipated these results, viewing the consensus 6% earnings growth forecast as "overly conservative." This narrowed expectation gap partly explains the tepid response.

**Why No Market Excitement? Eyes on the Horizon** Goldman attributes the disconnect to investors looking beyond Q3, prioritizing forward guidance amid macro uncertainties. The report cites trade tensions and regional banking stresses as factors heightening concerns over future earnings.

**AI Spending in Spotlight—But Profits Are Key** Another focal point is Big Tech’s AI capital expenditures. "Hyperscaler" capex continues to outstrip expectations: 2026 projections surged from $314B early this year to $518B.

Goldman’s critical insight: "Investor tolerance for capex growth hinges on earnings strength and perceived AI monetization." For instance, Alphabet’s stock rose after raising its 2026 net profit outlook, while Meta Platforms declined due to flat guidance.

Despite caution, corporate signals are mixed but leaning positive. Of 49 firms issuing Q4 guidance, nearly half topped expectations, lifting 2026 S&P 500 EPS forecasts by 2% to $308.

AI adoption also shows momentum. Half of reporting companies cited AI-driven efficiency gains this month—a modest increase from Q2.