AI Is Eating All the Earnings: Jonathan Levin

For investors, a concentrated portfolio of equity-market winners tends to work just fine — until it doesn’t. At the moment, the S&P 500 is a case in point: Its earnings remain both spectacular and spectacularly concentrated around the artificial intelligence story. The particulars are changing, and the profits are no longer accruing solely to tech and communications firms. But that doesn’t mean that the index’s fortunes are any less hitched to the AI theme.

First, the good news: With 78% of companies reporting, S&P 500 earnings per share are on pace to grow around 13.9% from a year earlier, better than the 7.6% analysts ...