The stock market is ultimately a machine that produces earnings. And right now, earnings are growing faster than most people realize.

The strong stock market is creating an IPO boom. And it sets the stage for SpaceX to IPO at a +$1.75 trillion valuation – within the next 60 days.

[Go here to invest before shares start trading.]([link removed])

S&P 500 companies are on track to report **15.1% earnings growth** for Q1 2026, according to FactSet. That would mark the sixth straight quarter of double-digit earnings growth.

**84% of companies that have reported so far have beaten earnings estimates.** That's above the 5-year average of 78%.

Here's what really caught my attention.

The net profit margin for the S&P 500 this quarter is tracking at 13.4%. That's the highest reading since FactSet began tracking this data in 2009. Higher than the tech boom. Higher than the post-COVID rebound.

American companies are more profitable right now than at any point in 15 years.

Now, a lot of that is being driven by the AI boom – and specifically Nvidia. The Magnificent 7 stocks are expected to grow earnings 22.8% in Q1 2026. Strip out Nvidia, and that number drops to just 6.4%.

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Nvidia is carrying a lot of weight right now.

But here's the thing — the rest of the market is doing better than that headline suggests.

**The other 493 S&P 500 companies are growing earnings at 10.1% in Q1 – faster than Alphabet, Amazon, Apple, Meta, Microsoft and Tesla.**

Financials are up nearly 20%. Industrials are up 16.7%. Materials are up 33%. That's solid, broad-based growth.

This isn't just a tech story.

The long-term case for stocks is simple. Over time, stock prices follow earnings. The correlation between EPS growth and market returns is one of the most reliable relationships in investing.

When profits grow, stocks go up. Not every quarter. Not in a straight line. But over a 3-, 5-, and 10-year horizon, earnings drive everything.

And analysts are projecting that growth accelerates from here. FactSet estimates call for continued earnings growth:

·       20.6% in Q2

·       22.7% in Q3

·       20.4% in Q4

·       18.6% full year 2026

The market is priced at 20.9x forward earnings. That's above the 10-year average of 18.9x. So, stocks aren't cheap.

But expensive markets can keep going up — if earnings keep growing. Right now, the evidence says they will.

Want to invest in SpaceX ahead of its IPO?

[Here’s a link to secure shares]([link removed]) at a deep discount.

Ian Wyatt
Editor, Daily Profit


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