JPMorgan: Q3 EPS Growth 24% to Back Broader Stock Rally

JPMorgan strategists led by Mislav Matejka said on 12 October 2026 that third-quarter earnings should support equities, with S&P 500 consensus EPS growth of 24% on IBES data and 30% on FactSet and LSEG after a Meta tax adjustment. Stripping out Nvidia and Micron, the bar falls to 15%, and to 8% for the median stock. European consensus is 19%, or 11% excluding energy, with a median of 9%. Median revenue growth sits at 7% on both sides of the Atlantic.

Context — why the earnings bar matters now

September delivered weeks of volatility that left many investors worried results would disappoint. JPMorgan argues the headline growth rates look more intimidating than the underlying picture warrants, because a handful of large-cap names inflate the index-level numbers.

The report offers its own comparable. Excluding Nvidia and Micron, the S&P 500 growth hurdle drops from 24% to 15%, and the median stock grows earnings at just 8%. That gap is the crux of the call: the index headline is not the typical company's experience.

In Europe, the comparable is starker. Consensus of 19% falls to 11% once energy is removed, with a median of 9%. Energy is expected to beat, while miners, China exposure and consumer-facing names lag.

Global purchasing managers' indexes accelerated during the quarter to multi-year highs, a backdrop JPMorgan says is consistent with strong earnings. The bank's own lead indicator for earnings is still rising and typically runs about two quarters ahead, which the strategists read as pointing to at least two more positive reporting seasons.

The catalyst chain is straightforward. Investors already hold a constructive view on earnings, so the debate is not whether growth exists but whether it is broad enough to sustain valuations after September's drawdown in risk appetite.

Data — what the numbers show

The index-level numbers and the median numbers tell different stories, and JPMorgan's case rests on the second set.

Metric	S&P 500	Stoxx 600
Consensus EPS growth	24% (IBES), 30% (FactSet/LSEG)	19%
Ex-energy / ex-mega-cap	15% ex Nvidia & Micron	11% ex energy
Median stock EPS growth	8%	9%
Median revenue growth	7%	7%

European operating margins are projected at around 14% of sales this year, some 250 basis points above 2019 levels. Every sector is improving except staples, autos and software.

On positioning, JPMorgan remains positive on European semiconductors, banks, chemicals and industrials. Banks have derated by more than 10% in recent weeks, and French equities by more than 15%, even as profits hold up. The CAC 40 earns three quarters of its revenue outside France, which limits the read-across from domestic weakness.

The share of global stocks with accelerating earnings is close to a record, the strategists noted, a breadth measure that supports the broadening thesis rather than a narrow AI-led rally.

Analysis — what it means for markets and sectors

The second-order effects run through valuation rather than earnings. If banks have derated more than 10% into results, the multiple compression has already priced in disappointment; holding profits steady leaves room for a relief move. French equities carry the same setup, with a 15%-plus derating against resilient earnings.

Semiconductors and industrials are the sectors JPMorgan expects to post strong results. Energy should surprise to the upside on margins. The weak spots are miners, China-linked exposure and consumer names, where the report sees continued softness.

Rising energy costs are the connective tissue between the earnings outlook and crude. Companies are likely to flag higher energy bills, which ties European margin expectations back to the oil price. A renewed spike in crude is a direct threat to the 14%-of-sales margin projection.

The main risk to the thesis is the bond market. JPMorgan says the recent spike in yields is nearing oversold territory. A peak in yields as reporting gets under way would remove the biggest headwind to valuations and open the way for equity gains into year-end with risk-on internals. A further leg higher would test the call.

Flow-wise, the setup favours rotation over concentration. A near-record share of stocks with accelerating earnings gives portfolio managers a reason to widen exposure beyond the AI complex that has carried US indices.

Outlook — what to watch next

The first catalyst is the direction of bond yields as the reporting season begins. JPMorgan frames a peak in yields as the trigger for equities to climb into year-end; a continued rise is the condition that would undermine the thesis.

The second is the earnings calendar itself. Semiconductor and industrial results are the ones the bank expects to impress, while banks and French equities are the derated segments where holding profits steady could be enough to move prices.

The third is energy. Companies flagging rising energy costs will tie the margin picture back to crude, so any renewed oil spike feeds directly into European margin risk. Miners, China exposure and consumer names remain the laggards to watch.

Investors should also track whether the breadth measure — the near-record share of stocks with accelerating earnings — holds through the season, since that is the evidence that leadership is spreading beyond AI.

Frequently Asked Questions

Why is the S&P 500 Q3 EPS growth figure 24% on one data set and 30% on another?

The gap comes from a one-off tax charge at Meta. IBES shows 24% growth, while FactSet and LSEG show 30% because of an adjustment for that charge. JPMorgan used both figures to make the point that index-level growth is sensitive to single-company items, which is why it also cites the 15% ex-Nvidia-and-Micron rate and the 8% median.

What does a peak in bond yields mean for equity valuations?

JPMorgan says the recent spike in yields is nearing oversold territory. If yields peak as the reporting season begins, the main headwind to valuations is removed and equities could climb into year-end with risk-on internals. A further leg higher in yields would instead test the bank's constructive stance on stocks.

Which European sectors does JPMorgan favour into Q3 results?

The bank stays positive on European semiconductors, banks, chemicals and industrials. Banks have derated more than 10% and French equities more than 15% in recent weeks, which the strategists see as setting a lower bar into results. Energy is expected to beat on margins, while miners, China exposure and consumer names may stay soft.

Bottom Line

JPMorgan's call rests on breadth and a peak in yields, not on AI leadership alone.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.