A rare, broad earnings pickup
Earnings are widening out beyond the usual AI winners. Bloomberg Intelligence projects that every sector in the S&P 500 will post growth for the third quarter, something not seen since 2021 as companies rebounded from the pandemic. Big Tech and oil are expected to stand out with earnings increases of 62% and 111%, respectively, while the rest of the index is also seen expanding as more businesses tap into AI's ripple effects.
According to Ohsung Kwon, who is chief equity strategist at Wells Fargo, "Things have started to broaden out - even last quarter, we have seen pretty sizable beats from non-AI companies as well." "We are starting to see broader strength in earnings."
How AI capital spending is spreading the gains
The sheer size of AI investment is spilling into multiple industries. Barclays' Venu Krishna, who oversees US equity strategy, said, "The overwhelming theme, which has been driving the broadening as well, has to do with the scale of AI-related capital spending." "That dollar amount is so high that what the hyperscalers are spending in terms of AI capex is effectively the revenue for a whole bunch of other industries, whether it's storage, whether it's hardware, whether it's parts of industrials, parts of energy, parts of utilities."
Krishna also flagged labor dynamics: "When rates go up, one of the first casualties is construction jobs, but we haven't seen that because the data center growth has been so dramatic that most of the labor has been reallocated." That momentum has lifted industrial suppliers of vacuum pumps, cooling gear and specialty coatings as data center building ramps up.
Who else is catching a lift
Consumers are feeling second-order effects. The AI buildout is creating jobs and supporting housing demand, while rising portfolios are nudging people to spend on retail, travel and dining. Inside companies, AI is starting to show up in operations too. BI's Mary Ross Gilbert points to AI-enabled shopping tools, customer service and distribution as ways Carter's Inc. can run leaner and expand margins.
Healthcare is projected to swing back to earnings expansion in the third quarter, and banks are seen delivering double-digit gains. Research led by Barclays' Krishna finds firms in these groups among the most willing to spell out AI-related benefits like cost savings and productivity. Financial companies could also benefit if high-profile IPOs from AI names come to market, and Kwon said regional banks may see more money flow through communities that host data centers.
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Not every pocket is winning, though. Within financials, insurers are on track for a third-quarter profit drop as pricing softens and losses climb. Media and advertising, inside communication services, is contending with tighter marketing budgets and clients turning to AI to craft their own campaigns.
Contracts, risks, and what it means for your money
Some companies are already updating guidance to reflect data center demand. Following new contracts with data center operators for catering, cleaning and transportation at their campuses, Aramark raised its guidance for the second time this year. Those agreements are expected to generate roughly $400 million to $500 million in extra revenue over the next two years.
Risks are real. Krishna pointed to higher interest rates and mounting strain in credit markets as potential drags. He also cited growing local resistance in some data center communities and recent calls from prominent AI leaders to consider slowing work on powerful frontier models, both of which could inject uncertainty.
Kwon said he turned more cautious on stocks a few weeks back on concerns about the durability of AI capex. "Data center moratoriums, especially heading into the midterms, I think that's a big risk as well, especially on sentiment," he said. "The AI trade is really a bottleneck trade right now, and any delays would alleviate that bottleneck at least a little bit."
For your wallet, the takeaway is straightforward: AI's spending wave is lifting a wide swath of companies, from industrials and consumer names to healthcare, banks and oil, but the narrative depends on continued buildout and favorable conditions. Watch for companies that quantify AI-driven efficiencies or land visible data center contracts, because that is where the money is actually landing.
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