Tajinder Dhillon Notes Private Investment Gains Inflate S&P 500 Earnings Growth
Tajinder Dhillon, head of earnings and equity research at LSEG, reported that recent S&P 500 earnings growth was significantly bolstered by private investment gains from tech giants. While the index saw a year-over-year growth of approximately 48%, Dhillon noted that this figure was heavily influenced by the valuation increases of private AI companies like Anthropic and OpenAI, as well as SpaceX. When these specific investment gains are removed, the growth rate drops to roughly 29%, aligning more closely with analyst forecasts. For instance, Amazon.com reported a massive $53.4 billion gain from its stake in Anthropic, while Alphabet saw a bottom-line growth surge of nearly 300% due to its holdings in SpaceX and Anthropic. Despite the inflation of headline numbers, many analysts view the underlying corporate earnings remain healthy. Jeff Kilburg, founder and CEO of KKM Financial, described the profits from these tech giants as "sprinkles" on top of an already strong earnings season, noting that the jump in corporate earnings was impressive even without the inclusion of private assets.