Goldman Sachs: Strong global third-quarter earnings, but growth acceleration fades

Just how strong were third-quarter earnings?

As of the report, 60% of S&P 500 companies had reported third-quarter results, with earnings per share at those companies rising 33% year on year; at this pace, the third quarter could rank alongside the second quarter as one of the strongest quarters in decades outside economic recoveries.
European corporate results also exceeded expectations, and Goldman Sachs expects third-quarter earnings per share to grow 23%. Energy and AI contributed a substantial part of the growth, but median earnings growth at US and European companies was 12% and 11%, respectively, showing that growth was not confined to a handful of companies.

Goldman Sachs notes that earnings growth is no longer accelerating and that analysts' upward revisions have lost some of their advantage over downward revisions, so it expects growth momentum to slow heading into 2027.
Market consensus also points to slower growth: earnings per share for the MSCI World Index are expected to grow 35.4% in 2026, before slowing to 16.9% in 2027; within that, the energy sector is expected to move from growth of 95.6% in 2026 to a decline of 10.5% in 2027.
The slowdown is not synchronized across sectors: consensus earnings growth for the global information technology sector in 2027 is 44.5%, below 89% in 2026, but still markedly faster than the global overall rate.

Goldman Sachs observed that companies missing earnings expectations underperformed the market by roughly twice as much as companies beating expectations outperformed it. Amid strong earnings, the share-price penalty for earnings disappointments was more pronounced.
Global equities were roughly flat in the week ended 30 October, with value outperforming growth; Goldman Sachs linked pressure on communication services and technology stocks to the unwinding of crowded AI positions, with the two sectors falling 6.7% and 1.4%, respectively, during the week.
From the beginning of October to the time of the report, the Nasdaq index fell 9%, while the S&P 500 index excluding AI-related stocks rose 8%, showing a marked divergence in market performance over the same period.