S&P 500: Can resilient earnings offset the AI-led sell-off? – Deutsche Bank

Heavy losses in AI-exposed stocks weighed on market sentiment, although sector rotation benefited Consumers Discretionary and Communications Services. Deutsche Bank reports that the S&P 500 stood at 7377 after gaining 0.31% on Friday, leaving it down 2.68% for the week, its weakest weekly performance since April 2025. Against this volatile backdrop, the bank’s asset allocation team finds that Q3 earnings growth globally and in the US remained remarkably robust, with margins at record levels.

Can strong earnings offset the AI-led index slump?

"The S&P 500 fell -2.68% (+0.31% Friday), marking its worst weekly performance since April 2025."

"Moreover, the most AI-exposed areas saw even bigger declines, with the Philly semiconductor index down -12.15% (+4.21% Friday), whilst CoreWeave fell another -15.44% (+6.28% Friday)."

"Our asset allocation team have reviewed the global earnings season here and highlighted how growth has remained remarkably strong in Q3 despite a very high hurdle after 38% year-on-year growth in Q2 and persistent upgrades ahead of the reporting season."

"US earnings growth likely held at 34%, with the median company growing 14% and growth excluding Tech, Energy and Materials at 13%, one of the strongest rates since the GFC."

"So although consensus sees some moderation in 2027, the striking feature of this earnings season has been how broad-based the strength remains even against an exceptionally demanding starting point."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)