Strategists Warn of 'Earnings Bubble' as Wall Street S&P 500 Profit Forecasts Surge

Wall Street analysts are raising S&P 500 profit forecasts at the fastest pace since the pandemic rebound, but several strategists warn the estimates underpinning the market’s record rally may not hold. According to BeInCrypto, analysts expect S&P 500 earnings to grow 25% over the coming year, while consensus profit estimates have jumped nearly 20% in six months, the sharpest rise since 2021. GMO’s Ben Inker and UBS HOLT’s Michel Lerner cautioned that AI-driven upgrades led by chipmakers and hyperscalers may be unrealistic, with Lerner warning of an “earnings bubble.” Nordea Asset Management’s Kasper Elmgreen also flagged a slim margin of safety ahead of second-quarter reporting season as traders price in at least one quarter-point rate hike by year-end.