Strategists Warn of ‘Earnings Bubble’ as Wall Street’s Profit Forecasts Surge

BeInCrypto2026/07/06 03:00

By:BeInCrypto

Bitget offers one-stop trading for cryptocurrencies, stocks, and gold. Trade now!

A welcome pack worth 6200 USDT for new users! Sign up now!

Wall Street analysts are raising SP 500 profit forecasts at the fastest pace since the pandemic rebound. Several strategists now warn the estimates propping up the markets record rally may not hold up. Analysts expect SP 500 company earnings to grow 25% over the coming year, according to data cited by the Financial Times. Consensus profit estimates have jumped nearly 20% in six months, the sharpest six-month rise since 2021. The Numbers May Not Be Real Ben Inker, co-head of asset allocation at GMO, said forecasts for the next two years are rising at an exceedingly high rate, nothing we have seen outside of a crisis recovery. He expects markets to eventually realize the numbers will not come true. The SP 500 has seen strong growth over the last 12 months. Image Source: Trading View Chipmakers and hyperscalers riding AI-driven stock rallies are driving most of the upgrades. Michel Lerner, who leads UBSs HOLT analytics platform, warned of an earnings bubble forming in the market. He said shares tied to AI are priced to maintain supernormal profits, and that sustaining current levels of profitability and growth is highly unlikely. The SP 500 has climbed 20% over the past year. The Nasdaq Composite has gained more than 25%, including its best quarter in six years. Rising forecasts have kept valuations in check even as indices hit fresh highs. Stocks now trade near 20 times forward earnings, well below the levels hit during the dot-com boom and last years rally. Earnings and AI Bubbles Are Building Kasper Elmgreen, chief investment officer for fixed income and equities at Nordea Asset Management, pointed to a thin cushion for error. He said earnings carry a slim margin of safety heading into the second-quarter reporting season. He questioned how long positive surprises can continue. Investors flagged a separate risk. Traders now price in at least one quarter-point rate hike by year-end. That marks a reversal from earlier bets on multiple cuts, adding fresh pressure to profit assumptions that already look overstretched. Read the article at BeInCrypto

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

Understand the market, then trade.

Bitget offers one-stop trading for cryptocurrencies, stocks, and gold.

Trade now！

1. The sharp escalation in Middle East tensions pushed Brent crude to multi-year highs of $105–$107 per barrel, reviving inflation expectations. The 10-year U.S. Treasury yield surged to 4.94%, its highest level since 2023, while the implied probability of a rate hike at the September 16 policy meeting to the 3.75%–4.00% range rose from 48.4% one month ago to 67.1%. 2. Rising oil prices and rate-hike expectations weighed on most risk assets, but historical data suggest that this is more likely to be a short-term adjustment than a reversal of the broader trend. Bitcoin fell 3.36% this week and the S&P 500 declined 1.64%, while gold slipped just 0.96%. Outside the energy sector, markets are largely repricing ahead of next week's expected rate decision. 3. PoolX has recently introduced a long-term holding bonus, significantly improving effective returns for users who maintain assets on the platform over time. The core participation rules remain unchanged; the update adds an additional boost to the effective locked amount for users with qualifying long-term holdings. In the example provided, a user locking 1000 ETH would see the estimated reward increase from 1666.67 USDT to 2500 USDT, or about 50%, while the reference APR rises from 4.93% to 7.40%. Assets to watch: BTC, ETH, SOL, Brent crude, WTI crude, gold, 10-year U.S. Treasuries, RAY, ZEC, LEN, CCL.

Bitget•2026/09/14 08:10