Making 27% profits outside of a recession never happened. yet
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When Thomas Edison stood in his laboratory in Menlo Park and let the carbon filament glow for 13.5 hours, skeptics who had spent two decades considering electric light a hoax were instantly silenced. Within ten years, electricity had gone from being a curiosity for the rich to wiring the streets of Manhattan. Within twenty years, the gas men were extinct.
Right now, Wall Street is having a Menlo Park moment.
The AI boom is no longer a story…it’s a number. A number that is too large, too specific, and too uncomfortable for skeptics.
For two years, every gathering was followed by the same whisper: What if it’s just noise? Every capex headline carried the phrase “But where are the profits?” Footnote. Bears have built entire theses around the gap between AI promises and AI profits.
With approximately 63% of Standard & Poor’s 500 Corporate reports, the mixed earnings growth rate is at 27.1%or more than double the 13% that analysts expected before the start of the season.
For context, the last time US companies posted a number this large was in the fourth quarter of 2021, and that was a rebound from the 2020 companies being shut down due to the coronavirus. Take away the recession and boom years (post-coronavirus, post-GFC, post-dot-com, post-early 1990s) and printing 27% profits outside of a recession never happened.
Every argument about “AI capex with no return” has been shredded in one quarter. The companies leading this number are AI names, including… Nvidia (NVDA), Micron (in), alphabet (Google), and Amazon (Amzn). Get ready for the next phase of AI Boom!
Below, we’ll reveal what the 27.1% earnings growth tells you about positioning for the rest of 2026, why we think the rally has a “very strong foundation,” and the story of an unfolding under-the-radar disruption at Amazon that could quietly become AWS’ next volume win.
Click on the video below to watch now:
Why is this earnings season breaking the rule book?
Historically, blended earnings growth of over 20% has been something you only see when the S&P is out of trouble. No hole this time. There was no stagnation in earnings in 2023, 2024, or 2025. Earnings were growing all along… and yet, come a quarter it feels like the economy just ran off the board.
The scale of this growth, in the absence of a fundamental impact of the recession, points to the infrastructure of artificial intelligence, chips, hyperscalers, memory, and cloud computing. The capital expenditures that everyone was worrying about appear as revenues and profits on the other side of the ledger.
For investors, the takeaway is: This is a momentum market driven by a fundamental driver, not a sentiment cycle.
“Is it a bubble?” The debate does not fit into a 27% earnings print.
The Amazon story is hidden inside the AI story
Aside from the major AI names, Amazon has just launched what it calls Amazon Supply Chain Services, which is arguably Amazon’s most important development since AWS. This pattern reflects the evolution of AWS: Amazon builds an internal capability, optimizes it for itself, then turns around and sells it to everyone else. AWS started as a back office project and now prints money that funds the rest of the business.
If the supply chain follows this curve, the implications extend far beyond AMZN. Traditional logistics names are already underperforming. United Parcel Services Company (UPS) hasn’t gone anywhere since 2015 while the S&P 500 has nearly tripled.
The market may have been pricing in the inevitable for a decade.
Bottom line: This train is already leaving the station
Step back and look at what just happened…
Blended earnings fell 27.1% (a number we’ve historically only seen to ride out recessions) in the middle of a recession. continuous expansion. The largest shareholders are the same names that have been called overvalued for two years in a row. The earnings have just been presented to the “show me the earnings” crowd.
Below the main number, the disturbance expands, not narrows. Amazon is moving from cloud dominance to logistics dominance. The hyperscalers are spending like they were in 1999…except this time, they’re booking revenue to match. Memory, chips, networks, and power are all flashing the same signal of supply, demand, pricing, and power that has defined the great supercycles of the past.
Can the market fluctuate? naturally. Iran on fire, dollar fluctuations, hot inflation print… any of these could shake a few percent. But the primary driver is not feelings. It’s profits. And earnings have just told you, in language Wall Street can’t ignore, that building AI is profitable and accelerating.
Investors who waited for “confirmation” before taking their positions just got it. The question is no longer whether The AI boom is happening. that it Nouns that double are the trickiest from here…and whether you hold on to it before the rest of the market finishes catching up.
Get the full playbook
We’ll tell you all about it in this week’s episode of Being exponentialincluding which AI infrastructure names I consider to be the most bullish, why precious metals deserve a second look at this decline, and “My Line in the Sand” for… Bitcoin (Bitcoin/US Dollar) Next step.
If you’re trying to take a position for the next stage of this earnings boom, Watch the full episode. The window between Signal confirmed and Agreed pricing It is the window through which real money is made… and this window is now open.
