MW More companies than usual are beating Wall Street's expectations. Why that hasn't really helped investors.

By Bill Peters

Earnings Watch: Walmart this week reports its first quarterly results under its new CEO, offering a look at the state of the consumer

Fears about artificial intelligence have overshadowed fourth-quarter earnings results.

With fourth-quarter earnings mostly wrapped up, two themes have emerged. The first: More companies than normal are beating Wall Street's expectations. The second: It hasn't really mattered for investors.

Fears about overexpensive valuations and artificial intelligence, in one way or another, have overwhelmed those results, which typically play a big role in driving stocks. The S&P 500 index SPX is down 1.5% over the past month, as investors worry about the astronomical costs to develop AI technology and the likelihood that it pays off - or potentially wipes out some industries.

"A number of long-term investors out there are responding to excessive share valuations in a number of sectors," John Blank, chief economist at Zacks Investment Research, said over email. "When faced with possible disruptions from AI, the mentality has been to shoot first and ask questions later."

In another sign that earnings weren't on the top of investors' minds, the S&P 500 sector that has reported the fastest earnings growth from a year ago has been information technology XX:SP500.45 at 30.7% - but despite that, the State Street Technology Select Sector SPDR ETF XLF has fallen 4.9% over the past month.

And while the energy sector XX:SP500.10 was the best performer among the index's 11 sectors over the past month - with the State Street Energy Select Sector SPDR ETF XLE surging 15.6% - earnings for the sector have slipped 0.3%.

Earnings may not have been as good as the numbers suggest on the surface. According to data from LSEG on Friday, 369 companies in the S&P 500 have reported fourth-quarter results. Of those, 74.5% have put up a per-share profit that was above Wall Street's expectations.

That's above the historical average of 67%, based on data going back to 1994. However, Tajinder Dhillon, head of earnings and equity research at LSEG, noted that when weighed against shorter-term numbers, the figure doesn't exactly stack up.

When compared with averages over the prior four quarters, he said, the 74.5% figure is the second lowest since 2023. It is also below the prior four-quarter average of 78.3%.

"One contributing factor is that, typically, estimates get revised lower heading into earnings season, which lowers the bar for companies to beat," Dhillon said. "That didn't happen this quarter, as analysts raised estimates modestly heading into earnings season, making the hurdle tougher."

Heading into the results, investors were a bit more nonchalant about threats to the economy. Some hoped that tariff clarity, easing inflation and tax relief would make 2026 a bit better than 2025. Wall Street's expectations for the results themselves ran higher in the process.

Dhillon noted that capital expenses for the five big AI hyperscalers - Amazon.com (AMZN), Alphabet $(GOOGL)$ $(GOOG)$, Meta Platforms (META), Microsoft $(MSFT)$ and Oracle $(ORCL)$ - were expected to reach $616.7 billion this year. As those spending plans stir greater anxieties, more investors have fled toward defensive consumer-staples names and sectors like energy and industrials.

Results in the week ahead will offer a better sense of discretionary consumer spending when Walmart $(WMT)$ reports. Those results, due Thursday, will be the first under new CEO John Furner, who analysts say will lead the retailer into a new era of AI for the industry.

A multiyear flight to bargains, as well as investments in e-commerce and AI-backed shopping, have helped the big-box chain consolidate its grip on the retail market. But after its market valuation cracked the $1 trillion barrier this month, some analysts have wondered how it can stay above that level.

"The market is debating various topics including the company's potential under the new leadership, [the] impact of agentic [AI], the outlook for the year ahead and its valuation, among others," UBS analyst Michael Lasser said in a research note on Wednesday. "In light of these topics, many investors are contemplating if the stock's momentum is sustainable."

Lasser said that as Furner settles into the job, the company could stay cautious on its outlook for the year. But he noted this shouldn't be a surprise for investors.

"In fact, this should set the company up nicely for another upward estimate-revision cycle," Lasser said. "This should support the stock."

DoorDash $(DASH)$, Etsy $(ETSY)$, Wayfair (W), Wingstop $(WING)$, Palo Alto Networks (PANW), Deere & Co. (DE) and Live Nation Entertainment (LYV) also report during the week.

-Bill Peters

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February 14, 2026 10:00 ET (15:00 GMT)

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