Markets VOO S&P 500 Profits Are on Track for a Third Straight Quarter of 25%+ Growth. The Index Hasn't Kept Up. September 22, 2026 — 10:57 pm EDT Written by Daniel Sparks for The Motley Fool linkedin facebook x email reddit Key Points FactSet pegs S&P 500 third-quarter earnings growth at 28.9%, which would be a third straight quarter of growth above 25%. From June 30 through FactSet's most recent report, the index's expected earnings for the next 12 months increased 8.8%, while its price rose just 1.8%. Chipmakers and their equipment suppliers are projected to grow third-quarter earnings 126%, the most of any industry in the technology sector. 10 stocks we like better than Vanguard S&P 500 ETF › The S&P 500 (SNPINDEX:^GSPC) finished Monday at 7,764.70, less than half a percent below the record close of 7,798.99 it reached in mid-August. Typically, a market hits records by becoming pricier. Over the past three months, the reverse has happened. Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue » According to FactSet's Sept. 18 weekly earnings report, expected earnings for S&P 500 companies over the next 12 months have climbed 8.8% since June 30. The index's price, through the report's data, had gained just 1.8% over the same period. Profit expectations, in other words, have been doing almost all of the work. And for anybody weighing a fund that follows the index, such as the Vanguard S&P 500 ETF (NYSEMKT:VOO) , that gap, I'd argue, changes the math: A buyer at the end of June paid 20.4 times expected earnings. A buyer now pays closer to 19 times expected earnings. Image source: Getty Images. Three straight quarters of 25% growth FactSet places the S&P 500 's third-quarter earnings growth at 28.9%. If companies deliver that figure, it would be the index's third straight quarter of year-over-year earnings growth above 25%. And the estimate has been moving the wrong way for anyone expecting a slowdown. On June 30, analysts expected 26.7% growth for the quarter. That direction is uncommon. In a normal quarter, analysts lower their earnings-per-share estimates as reporting season nears. Not only did they lift them this time, but it also marked the second straight quarter of increases. From June 30 through Aug. 31, the index's third-quarter earnings-per-share estimate rose 1.2%. The five-year norm for those two months is a 1.7% drop. Revenue tells a similar story. S&P 500 sales are expected to grow 11.9% year over year in the third quarter, which would make it a third straight quarter above 10%. Put another way, the earnings growth isn't coming only from cost cuts or share buybacks. Sales are growing, too. Is the market becoming cheaper? In one respect, yes. The index's forward price-to-earnings ratio (its price divided by expected earnings over the next 12 months) dropped from 20.4 on June 30 to 19.1 as of FactSet's report. That left it below its five-year average of 19.8, although still above its 10-year average of 19.0. And even after Monday's 1.5% rally, the forward price-to-earnings ratio stands around 19.4, under the five-year mark. The Vanguard fund holds the same stocks the index tracks and sells for about $713 per share as of this writing. Of course, the market only looks cheaper when measured against earnings that haven't been reported yet. Set the price against the earnings S&P 500 companies have delivered over the past 12 months, and the index trades at 25.5 times earnings, above both its five-year average of 24.4 and its 10-year average of 23.6. That discount to the five-year average hinges on analysts being roughly right about the next year, and estimates can miss in both directions. The boom is lopsided All 11 sectors are expected to grow earnings in the third quarter, but the totals rely on a few areas. Energy ranks first at about 110% growth, supported by oil prices that have averaged about 30% above their year-ago level in the quarter. The technology sector comes next at about 63%, and within it, chipmakers and their equipment suppliers are projected to grow earnings 126%. Strip out the chip companies, and the remainder of the sector grows about 24%. The communication services sector's 51% growth, meanwhile, leans heavily on Meta Platforms -- the social media company 's third-quarter earnings per share are expected to jump to $6.74 from $1.05 a year before. That said, analysts don't expect the run to last forever. They forecast 26.5% earnings growth in the fourth quarter and 31.8% for all of 2026, followed by a slowdown to about 15% in 2027, including a nearly flat second quarter. And if spending on artificial intelligence cools, chip profits could decelerate more quickly than projected. That leaves the below-average forward price-to-earnings ratio measured against what might be the strongest period