While headline S&P 500 second-quarter earnings per share (EPS) growth surged to 37.9%, Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) boosted that figure by 12 percentage points—and Carson Investment Research warns that the tech giant’s fine print tells a very different story.
The 12-Point Market Distortion
According to a weekly earnings report by Carson Investment Research analyst Harry McDonald, blended EPS growth for the S&P 500 jumped 13 percentage points in just five trading days. Alphabet alone accounted for “92% of the net dollar-level increase in S&P 500 earnings over that stretch.”
Stripping out the tech giant reveals a significant shift in index fundamentals. Without Alphabet, blended earnings growth falls from 37.9% to 25.9%.
Furthermore, the record S&P 500 net profit margin drops from 15.7% to 14.4%, and the aggregate earnings surprise collapses from 39.3% to 12.6%.
Reading the Fine Print
Alphabet reported a headline EPS of $9.11 against a $2.88 estimate—a 216% beat that McDonald called “wild.” However, Carson urges investors to “read the fine print.” That GAAP figure was heavily inflated by roughly $98 billion in unrealized net investment gains on private equity securities, which contributed $6.26 per share on its own.
In reality, Alphabet’s income from core operations fell to $14 billion, down from $25.5 billion a year ago. Excluding the revaluation gain, Alphabet earned $2.85 per share, missing consensus estimates.
“I’d rather build a view on the $14 billion that reflects operating earnings than the $112 billion that includes the revaluation gains,” McDonald noted.
Revaluation Risks Ahead
Carson warned that portfolio revaluations tell investors “nothing about whether the underlying business is compounding.” McDonald added that “private marks that inflate reported earnings on the way up could become a drag on the way down.”
Nevertheless, Carson concluded that a 25.9% ex-Alphabet growth rate remains “an excellent quarter,” showing that broad market earnings strength remains intact beneath the headline numbers.
How Has GOOGL Performed In 2026?
GOOGL shares were up 6.62% year-to-date, down 1.09% over the last month, and higher by 73.28% over the year. It closed 2.19% higher at $333.71 per share on Tuesday, and it was up XX% in premarket on Wednesday.
Benzinga’s Edge Stock Rankings indicate that GOOGL maintains a strong price trend in the long term but a weak trend in the short and medium terms, with a solid growth score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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