In the September 2025 earnings season, Mega-cap companies significantly influenced the overall S&P 500 upgrades, according to a report from Yes Securities. While these Mega Caps continue to drive earnings growth, the pace of their expansion is starting to stabilize.
The “Magnificent 7” — which includes Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia, and Tesla — experienced a 1.0% upgrade, in contrast to the 0.4% increase seen for the broader index, and slight downgrades for the S&P 500 excluding Mega Caps.
Hitesh Jain, the lead analyst, Yes Securities pointed out that this situation underscores the ongoing concentration of earnings strength within the largest technology firms in the U.S.
According to Jain, nevertheless, future growth expectations indicate a trend toward normalization. Although Mega Cap EPS soared by 60% in calendar year 2024, a slowdown to 35% is anticipated for 2025, with further declines expected to around 13-15% by 2026-2027. In comparison, S&P 500 earnings growth is forecasted to stay within the 12-14% range, indicating that the performance gap may narrow as base effects take hold, as noted by Jain.
Assessing the trends, the brokerage noted that specific cyclical sectors and tech-related industries are experiencing a resurgence, despite difficulties in certain areas of energy, materials, and real estate. In general, the earnings outlook leading into 2026 appears positive, yet increasingly complex, defined by robust top-line growth, inconsistent margin progress, and an expanding divide between structural winners and laggards.
Mega-Cap Earnings — Strong Revenues, Mixed Profitability
According to Yes Securities, nearly all companies in the Magnificent 7 surpassed revenue forecasts, with significant strength observed in AI-driven semiconductor and cloud services. Nonetheless, the earnings results were inconsistent—four of the seven did not meet profit projections, primarily due to rising operating costs, investments in AI infrastructure, and heightened competition in the fields of digital advertising and streaming.
Polarised Earnings Revisions Across Stocks and Sectors
Yes Securities, in its report, indicated that earnings revisions for CY26 showed a clear divide. Upgrades were primarily found among specific technology, financial, and industrial companies—highlighted by names like Bunge, Western Digital, Amphenol, Newmont, and various growth-focused tech platforms. On the other hand, numerous large-cap sectors experienced significant reductions, especially in real estate, energy, healthcare services, and conventional industrial businesses.
“Top downgrades exceeded 40–60% in certain cases, underscoring pockets of notable fundamental deterioration. Sector-level revision trends reinforced this divergence. Communication Services, Financials, and Technology registered the highest share of upgrades, while Energy, Materials, and Utilities were dominated by downgrades. This aligns with shifting dynamics—moderating commodity prices, and soft industrial demand,” said the brokerage.
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