Here’s the thing about Q1 earnings: they were absolutely bonkers. The S&P 500 just posted 27.1% earnings growth year-over-year—the best since the post-COVID reopening in 2021. And get this: it happened while oil was spiking, the Fed was paralyzed, and consumers were literally eating into their savings to pay for groceries. That’s not luck. That’s structural.
But here’s where it gets interesting. Strip out the tech sector, and that 27.1% growth drops to about 5%. Yeah, you read that right. Three companies—Alphabet, Meta, and Amazon—accounted for 71% of the entire S&P 500’s earnings increase last week. The Magnificent 7 are basically carrying the market on their backs like some kind of financial Atlas.
The reason? AI infrastructure spending. And we’re not talking about chump change here.
Microsoft, Alphabet, Amazon, and Meta are collectively spending roughly $700 billion on AI buildout in 2026. Data centers, chips, power systems, the whole nine yards. And they’ve publicly committed to *increasing* that number into 2027, with projections hitting $1 trillion. That’s not a forecast. That’s a shareholder promise.
Here’s why that matters for your portfolio: this spending flows directly into the earnings of the companies supplying the buildout. Chip designers, power providers, data center operators—they’re all getting paid. And unlike consumer spending (which depends on whether someone feels like dropping $8 on a latte), this money is locked in. The hyperscalers have already told their shareholders it’s happening.
Compare that to the rest of the market. Non-tech stocks are growing fine—just not phenomenally. They’re exposed to the usual suspects: consumer demand, interest rates, global slowdowns. The upside is limited, and the risks are real.
So what does this mean for you?
If you’re nervous about buying tech after the 32% explosion in the XLK (pure tech ETF) since late March, don’t be. Yes, it’s been a wild run. But the earnings visibility is unusual. The capital commitments are public. The growth is structural, not speculative.
One stock worth watching is GE Vernova (GEV), which provides the energy infrastructure keeping data centers humming. First-quarter earnings surged 1,700% year-over-year, with adjusted earnings beating estimates by 18.6%. That’s the kind of number that gets institutional money moving fast.
The playbook is straightforward: stay long tech and AI with confidence. The data supports it. The earnings support it. A trillion dollars in committed hyperscaler CapEx supports it.
For the rest of the market? Be selective. Be cautious. Know what you own, why you own it, and when you’ll sell.
But with those guardrails in place, welcome to the Summer of AI. It’s going to be weird. It’s going to be profitable. And it’s definitely not over.
