Chipmaker earnings growth cools to 136% as AI boom lifts S&P 500

US semiconductor companies are expected to report third-quarter earnings growth of about 136%, down from about 158% in the second quarter, Tajinder Dhillon, LSEG’s head of earnings and equity research, said on Friday.

Overall S&P 500 profits are expected to be up about 31% from a year ago, with the AI trade still doing most of the heavy lifting, analysts said.

Samsung guides to a record 107.4 trillion won operating profit

Dhillon said the tech sector, plus Alphabet, Amazon.com and Meta Platforms, is set to account for two-thirds of the index’s gains. Even with the slowdown, chipmakers are growing at a rate several times that of the index.

Momentum in upward estimate revisions is beginning to slow, said Nick Raich, CEO of research firm the Earnings Scout.

Raich likened the AI infrastructure build-out to a car slowing down from 150 to 100 miles an hour over a period of three months. The latest results from Micron Technology were still strong, he said.

Last month, Micron guided above estimates for its current quarter. Its long-term supply agreements now have $32 billion in customer commitments.

Chip results outside the US index point the same way. Samsung guided to a record operating profit of around 107.4 trillion won, or ~$80.2 billion, in the third quarter, fueled by demand for high-bandwidth memory.

The figure came slightly higher than the 106.1 trillion won analysts had expected, and would mark the fourth straight record quarter for Samsung. Full results for Samsung due Oct. 29.

TSMC reported September revenue of NT$511.86 billion, up 54.6% year-on-year. Taiwanese foundry’s estimated third quarter revenue hit a record NT$1.49 trillion, above the top of its own guidance.

Third-quarter forecast climbed from 15.1% to 30.6% since January

LSEG’s earnings scorecard for October 9 reveals the broader slowdown. The blended S&P 500 earnings growth for the third quarter is 30.6% compared to 53.7% in the second.

Blended estimate was 15.1% on Jan. 1, 21.3% on April 1 and 27.6% on July 1.

Of the 19 index members that reported early, 84.2% beat analyst estimates. Blended revenue growth is 11.8%.

Scorecard expects growth to decelerate to 28.9% in the fourth quarter and 19.8% in the first quarter of 2027. Second quarter growth was the fastest since 2021 and some 35%, with the mark-to-market gains on AI stakes excluded for Alphabet and Amazon.com.

JPMorgan Chase and Goldman Sachs kick off the earnings season next week. S&P 500 hit a record high this week on tech gains.

Microsoft, Alphabet, Amazon, Meta Platforms and Oracle’s planned capital spending climbed from ~$485 billion in January to ~$730 billion by July.

Alphabet’s free cash flow turned negative at $5.9 billion in the June quarter due to a rising bill for its AI. Alphabet lifted its 2026 forecast for capital spending to $195 billion to $205 billion.

And investors have been demanding that Big Tech turn that spending into returns.