{"id":19514,"date":"2026-05-12T07:59:45","date_gmt":"2026-05-12T13:59:45","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=19514"},"modified":"2026-05-12T07:59:45","modified_gmt":"2026-05-12T13:59:45","slug":"sp-500-earnings-everyone-is-now-an-sp-500-earnings-expert-and-a-quick-look-at-ciscos-expected-earnings","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=19514","title":{"rendered":"SP 500 Earnings: Everyone is Now an SP 500 Earnings Expert, and a Quick Look at Cisco’s Expected Earnings"},"content":{"rendered":"

With the rapid growth in SP 500 earnings since January 1 ’26, there has been a lot of new earnings commentary on the wires.<\/p>\n

Ed Yardeni is the dean of SP 500 earnings commentary since the late 1990’s. Ed is probably the single best source for earnings insight and more importantly, the changes that are seen with SP 500 estimates, within the bull and bear markets. This blog has been tracking the data for 15 – 16 years,\u00a0 and some data goes back to the early 1970’s, but it’s not comprehensive. Also, if there one thing I’ve learned over the 30 years managing money, SP 500 earnings data is mostly a coincident-to-lagging indicator relative to the SP 500 itself.<\/p>\n

SP 500 earnings data will NOT call a market top. I went back and looked at the spreadsheet data for the March 9th, 2009, SP 500 bottom, which marked the end of the 10 bear market that started with the March 20th, 2000 peak for the SP 500 and Nasdaq, and the “forward 4-quarter” SP estimate didn’t stop falling until later in May, 2009, when it finally did begin to rise. So that’s a 2-month lag between earnings data and the market itself. In the two months from March 20th, 2000, to later in May, 2000, the Nasdaq fell 40% in value.<\/p>\n

The big issue with Q1 ’26 SP 500 earnings that the various sources are not reporting, is the one-time gains in Google’s and Amazon’s earnings from the sale of both those companies respective investment positions in Anthropic. Google’s sale totaled $36.5 billion, and it was reported appropriately as a below-the-line item, meaning it fell below the operating income line. That $36.5 billion Google sale represented $3.01 in EPS for the search giant. Google’s reported EPS beat was largely this one-time gain. Amazon’s $16.8 bl sale of it’s Anthropic stake amounted to $1.54 in EPS. (In this blog post from May 3rd<\/a>, it talks about the sharp jump in the SP 500’s expected EPS growth rate in Q1 ’26, and then notes the subsequent downward revision for Q1 ’27. The sell-side analysts adjusted Q1 ’27’s expected SP 500 EPS growth for the one-time liquidation of Anthropic, as should be done. I had to confirm the sales by looking at the actual income statements and seeing how the one-time gains were treated. )<\/p>\n

That’s an extra $52 billion in pre-tax income in Q1 ’26 that is considered a one-time-gain from an earnings perspective. LSEG appropriately tipped off readers by revising downward Q1 ’27’s expected SP 500 EPS growth rate.<\/p>\n

Outside of the income statement treatment, what I found interesting was both Alphabet (GOOGL) and Amazon sold their stakes (or possibly partial stakes) at the same time, i.e. in the same quarter. I remember in the late 1990’s, particularly 1999, Intel had a non-marketable investment portfolio, that they began selling in the late 1990’s. Is it a tell for the end of the bull market or possibly the end of the AI growth ?<\/p>\n

Cisco earnings preview:<\/em>\u00a0<\/strong><\/p>\n

Cisco (CSCO) is scheduled to report their fiscal Q3 on Wednesday night, May 13th, after the market close. Sell-side consensus is expecting $15.56 billion in revenue, $5.27 billion in operating income and $1.04 in earnings per share (EPS), for expected y-o-y growth of 10%, 8%, and 8% respectively.<\/p>\n

Cisco was originally non-correlated tech, although the +29% return YTD as of Monday, May 11th, and the +32.87% return in calendar 2025, certainly looks “AI-like” for a company that has been revenue and EPS in the mid-single-digits, for – well – a long time.<\/p>\n

50% of Cisco’s revenue is still the legacy networking and routing business from the 1990’s, and while the company has tried to create new product lines within software and security, the revenue growth has yet to materialize. The $28 billion Kerplunk acquisition from March ’24 was supposed to create an “enhanced security” revenue stream to benefit Cisco’s existing security business, but once the merger lapped it’s acquisition date, y-o-y revenue growth has once again turned negative.<\/p>\n

The one bright spot is Cisco’s legacy networking business: here’s the y-o-y revenue growth the last 4 quarters:<\/p>\n