Diving Into the Earnings ‘One-Off’ Narrative

Editors’ Note: MarketMinder doesn’t make individual security recommendations. Any mention herein is incidental to the broader point we wish to illustrate

Q2 earnings season is wrapping up, and the headline numbers are strong. Yet many downplay the results, arguing S&P 500 earnings growth is a mirage—supported by a handful of companies, an illusory metric and one investment theme (AI). Those gripes overlook Corporate America’s broad-based strength, suggesting that, while sentiment is warmer, a bullish disconnect between expectations and reality remains. 

As of August 14, with over 90% of S&P 500 constituents reporting, Q2 earnings skyrocketed 50.6% y/y after Q1’s swift 29.0%.^[i] Of the 11 equity sectors, 10 reported growth, led by Energy (146.3% y/y) and Communication Services (116.9%), while Health Care (-6.6%) was the lone detractor.^[ii] Of the reporting companies, 85% beat expectations, well above the 5-year (78%) and 10-year (76%) averages.^[iii] Should the current earnings growth hold as the remaining companies report, it would be the highest since Q2 2021’s 91.6% y/y rate, which reflected a pandemic-related surge off of a depressed base as businesses reopened.^[iv]

However, some observers claimed the bustling figures are a fiction, arguing a big chunk reflects unrealized, mark-to-market gains from a handful of big Tech firms’ investments in other companies—one-offs. That point is correct, but the conclusions people draw from it miss the forest for the trees.

As mainstream outlets pointed out, both Alphabet and Amazon’s big Q2 profits reflect investment stakes in AI firms: Over 70% of Alphabet’s net quarterly income came from its stakes in companies like SpaceX, echoing a similar story for Amazon and its investment in Anthropic.^[v] Yet pundits make it sound like everyone is overlooking the fundamentals. A Wall Street Journal piece rightly called the investment gains “unrealized paper profits” and “inherently nonrecurring” but bemoaned analysts’ flip-flopping on which earnings numbers to highlight.^[vi] Thing is, these companies aren’t hiding anything—Amazon and Alphabet both reported strong core business results, and the windfalls from investments in other Tech merely added to an already bonzer quarter.^[vii]

Also, those investment gains aren’t a surprise. Most analysts know these equity stakes exist and usually just look through them, knowing the effect is a one-off and often evens out in time. Moreover, broad strength extends well beyond all this. Per FactSet, the S&P 500’s Q2 blended earnings growth rate excluding Alphabet and Amazon would still be 32.0% y/y—the seventh-consecutive quarter of double-digit earnings growth (and the second-straight of 25% or more)^[viii] This isn’t all equity investment. It also isn’t just tariff refunds, which as of August 12, The Wall Street Journal put at just $9.6 billion from 40 reporting S&P 500 companies. The biggest, Apple, reported $2.2 billion in tariff refunds—a small fraction of over $110 billion in net income.^[ix]

Earnings often feature one-offs that don’t indicate broader Corporate America’s health. For example, Energy’s Q2 earnings surged 147.0% y/y due primarily to the jump in global oil prices.^[x] Energy firms’ earnings are price-sensitive, meaning the industry’s profits swing more on global oil prices than the quantity (i.e., volume) of products sold. Q2’s oil price jump is likely temporary after war broke out, especially as global oil supply isn’t as tight as previously feared. But if you want to dwell on Tech or Energy’s one-offs, you must also do so for one-off negatives, too. Health Care is the one sector with contracting earnings (-6.7% y/y) due solely to two companies with one-off charges.^[xi] Excluding those two firms, Health Care’s Q2 earnings would be up 17.9% y/y.^[xii]

Observers complain some firms and/or analysts are playing fast and loose with earnings and cherry-picking the best numbers. But look at sales, which represent the demand for Corporate America’s goods and services. Growth here is its strongest since Q4 2021, with all 11 sectors in the black. Customers are buying what companies are selling. Earnings growth flows from that. This is no mirage.

Exhibit 1: Q2 2026 S&P 500 Revenues

Source: FactSet, as of 8/17/2026. Reflects 458 S&P 500 constituents reporting.

This broad-based strength isn’t just a US phenomenon. With nearly 93% of the MSCI Economic and Monetary Union’s constituents reporting, Q2 earnings for the eurozone are up 14.6% y/y, with 8 of 11 sectors positive.^[xiii] Notably, Europe’s strength isn’t a AI, Tech or one-off story. While earnings are backward-looking, Q2 confirms public firms worldwide are chugging along despite the war in the Middle East, tariffs and a host of other headwinds. This isn’t news to stocks, but a useful reminder for investors worried about whether markets are “missing” something in an uncertain world.