Q2 2026 Earnings Season Is Almost Over -- 3 Takeaways Investors Need To Know

The second-quarter earnings season is nearly in the books.

Quarterly earnings are one of the most important drivers of the stock market, and while they're typically examined on an individual or sector level, it's worth taking a look at what corporate earnings at large say about the state of the stock market and the economy, especially at a time of high market volatility due to the ongoing conflict around the Strait of Hormuz and elevated oil prices.

Let's take a look at three takeaways from first-quarter results.

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1. The U.S. consumer is down but not out

Major retailers Walmart (NASDAQ: WMT), Target (NYSE: TGT), and Home Depot (NYSE: HD) typically have their finger on the pulse of the American consumer, and are among the barometers to watch for consumer spending.

Target and Walmart reported strong comparable sales in the U.S., though both companies expressed cautiousness around the rest of the year, and noted evidence that higher gas prices are weighing on consumer spending. Walmart said the average consumer is filling their tank up with less than 10 gallons of gas, a sign of distress that it hasn't seen since 2022. Retailers also noted the benefit from higher tax refunds in the first quarter, which will roll off over the rest of the year. Both stocks fell following their reports as investors seemed to be spooked by the lack of confidence looking forward.

Similarly, Home Depot described weakness among DIY shoppers, who delayed spending on the largest discretionary projects.

2. The AI boom is still heating up

Reports from major semiconductor stocks and the hyperscalers showed the AI boom is accelerating. Nvidia reported 85% revenue growth in its first quarter, its third straight period of accelerating revenue growth, and hyperscalers saw accelerating growth in cloud revenue. For example, Amazon (NASDAQ: AMZN) Web Services reported its fastest revenue growth in 15 quarters at 28%. Google Cloud revenue jumped 63% in the first quarter, up from 48% sequentially, and Microsoft (NASDAQ: MSFT) Azure grew by 40%.

Those are all signs of strong demand for AI compute, which is driving the AI boom. Additionally, CPU stocks like Intel (NASDAQ: INTC), AMD (NASDAQ: AMD), and Arm (NASDAQ: ARM) all surged as AI development shifts toward agentic AI, which relies more on CPUs for inference rather than the GPUs used for AI training.

3. Wall Street is strong

Despite larger concerns about high interest rates, a weak labor market, and pressure from higher energy prices, Wall Street delivered impressive results in the first quarter, benefiting from strong trading revenues and an active M&A and IPO market.

Smaller commercial banks saw more mixed results with net interest margins rising at some and falling for others in a volatile interest rate environment.

Overall, as the record stock market would seem to indicate, the economy remains resilient despite the risks it's facing. While some cautiousness at the consumer level is warranted, the tech engine is likely to keep fueling growth in corporate earnings. Valuations are high, but earnings growth could support further gains in the stock market this year.

Jeremy Bowman has positions in Advanced Micro Devices, Amazon, Arm Holdings, Home Depot, and Target. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Home Depot, Intel, Microsoft, Target, and Walmart. The Motley Fool has a disclosure policy.