4 Aug 2026 US Equity Strategy

US Equity Strategy EPS Broadens. Buy the Momentum Dip: 10 Lessons from US Earnings Chief US Equity Strategist & Multi-Asset Strategist Manish Kabra 1. Another stellar earnings season: 6/10 firms have reported, 70% of market cap. Only 9% have missed estimates-the lowest reading ever. 2. 'Boom' in beats and margins: 86% of firms have beaten estimates, while margins improved across 10 of 11 sectors in 3 months. Both S&P 500 and ex-Tech margins reached Head of Equity Strategy Charles de Boissezon record highs. . Beats still rewarded: Despite the mid-season 5-sigma Momentum shift, beats outperformed the S&P 500 by 0.2%, while misses underperformed by 0.8%. 4. Upgrades remain strong: Fifteen stocks were upgraded for every ten downgrades-firmly above average. Tech, Financials and Industrials saw the strongest upgrades. Related strategy notes: 5. Profit growth upgraded: 2026 EPS estimate has risen 2% to $335 since the season began, now broadly in line with our $333 top-down forecast. ’27 EPS estimate up by 1%. Watch CDS, Not EPS, for 6. High base into 1H27: A strong 1H26 should drive a second-derivative slowdown in 1H27, Hyperscalers and "Dr Yield Curve" consistent with AI capex growth peaking in 4Q26E at 90%. for the Fed,28th July 7. Higher, not elevated, uncertainty: Estimate dispersion, a measure of fundamental Employment Signals Turn Up; AI uncertainty, has risen steadily over the past 12 months but remains below its historical Momentum Holds, 22nd July average. 8. AI “hard data” is accelerating: The best hard data for AI expansion is the hyperscalers 3Q26 US Equity Outlook: Not a cloud revenue growth. Big Three cloud growth accelerated with Google at 82%, Microsoft 'Big Top' - Bullish, not Blind at 43% and Amazon at 37% (cover chart). Backlogs rose $300bn (raised by 15%) and capex guidance increased $150bn (up by 10%). Until the expected 2027 FCF inflection, watch CDS-not EPS. See pg 6-8 With thanks to Wenli Ding and 9. Industrials: Record Margins, Rising Upgrades: Large-cap EPS is growing 15% at record Kawtar Mamouni, Research margins, while small-cap growth has reached 30%. CEO capex confidence is at its highest Associates, for contribution to since 1Q22, Sell-side upgrading two stocks per every downgrade. See pg 9 this report. 10. Our take: EPS is broadening, and record highs in the S&P 500 Equal Weight Index are a testament to this. Cycle drivers are still running hot, with AI capex accelerating into 2H26, CEO capex confidence building, and Corporate America's message on the consumer remaining simply strong. Market leverage is high, but a reversal requires aggressive tightening and a yield-curve inversion (not our scenario). Higher real yields cap re-rating, but the sharp Momentum reversal presents opportunities. Prefer S&P 500 Equal Weight and see the SPX at 8,000. S&P 500: 86% of firms beating EPS estimates AI “hard data” remains strong: Cloud growth surge across the three big Hyperscalers

Source: FactSet, SG Cross Asset Research/Equity Strategy Source: Company filings; FactSet, Refinitiv, Bloomberg, SG Cross Asset Research/Equity Strategy

S&P 500: Profit Cycle and the Earnings Season S&P 500: 86% of firms beating EPS estimates S&P 500: Only 9% of firms missing EPS estimates 90 % 2Q26 EPS 90 40 % 40 85 +1SD reporting 85 season so far Avg 75 +1SD 25 Average SD 60 -1SD Q26 EPS 5 reporting season so far 5 50 3Q08 2Q09 1Q10 4Q10 50 3Q08 2Q09 1Q10 4Q10 3Q11 2Q12 1Q13 4Q13 3Q14 2Q15 1Q16 3Q11 2Q12 1Q13 4Q13 3Q14 4Q16 3Q17 2Q18 1Q19 4Q19 2Q15 1Q16 4Q16 3Q17 2Q18 3Q20 2Q21 1Q22 4Q22 3Q23 1Q19 4Q19 3Q20 2Q21 1Q22 2Q24 1Q25 1Q26 4Q22 3Q23 2Q24 1Q25 4Q25 Source: FactSet, SG Cross Asset Research/Equity Strategy Source: FactSet, SG Cross Asset Research/Equity Strategy

Reported Profit Margins continue to improve for both Tech and S&P 500: Profit Margins Improve Across 10 of 11 Sectors (3m non-Tech sectors change) 14% S&P 500 ex-Tech: 12m Reported Profit Margin 14% S&P 500: 12m Reported Profit Margin 13% 13%

6% 6% Source: FactSet, Refinitiv, SG Cross Asset Research/Equity Strategy Source: FactSet, Refinitiv, SG Cross Asset Research/Equity Strategy

EPS Continues to grow in S&P 500 and ex-Tech Sectors Size and Value EPS beat this season 50%…