Investing.com -- Big Tech is once again at the center of stronger-than-expected U.S. corporate earnings, according to Barclays analysts, who say the group is “still core to SPX earnings power” and is helping lift full-year forecasts.

In a recent U.S. Equity Insights note, Barclays wrote that “Big Tech continues to defy expectations,” reporting a 12% average earnings beat, 27% year-over-year earnings per share (EPS) growth, and a 190 basis point expansion in net profit margins.

“FY25 consensus has rebounded to $267,” the analysts noted, after having nearly dropped to Barclays’ own $262 forecast in June.

The upward revision has been driven by “beat-and-raises from Big Tech and Financials.”

The bank notes that two-thirds of the S&P 500 market cap had reported second-quarter results by last Friday, with 82% beating estimates, well above the long-term trend of 76%.

The average earnings beat came in at 8.5%, led by discretionary names (boosted by Amazon (NASDAQ:AMZN)), as well as real estate and financials. Overall, EPS grew 8.5% year over year, with top-line growth of 5.3%.

However, Barclays warned that the broader market isn’t keeping pace. “SPX ex-Big Tech EPS growth looks like it’s slowing for the second straight quarter,” the analysts said.

They noted that sectors like materials, utilities, and healthcare are seeing downward revisions to FY25 estimates.

Despite valuation concerns, the S&P 500 now trades at around 23x next-twelve-month EPS and Barclays remains “constructive” on both Financials and Big Tech.

“While ~29x NTM is high, the premium vs. SPX is modest, valuations are still down YTD and EPS estimates are improving,” the analysts wrote.

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