Fidelity’s Jurrien Timmer says Q3 earnings growth could hit 30% to 35% if recent quarters’ typical bounce repeats. Yet the market’s trailing price-to-earnings (P/E) multiple has fallen 10% year-over-year.

Timmer, Fidelity’s Director of Global Macro, says trailing earnings are up 28%, with forward earnings expected to rise another 20%. Investors, however, are not paying higher multiples for that growth.

Can Q3 Earnings Growth Really Reach 35%?

Double-digit growth is built into every upcoming quarter, and the estimates keep climbing, Timmer says.

Bloomberg data in his chart shows Q2 2026 growth ending at 34% and Q1 2026 at 29%. Those readings sit well above the 11% to 15% posted from Q4 2024 through Q3 2025.

Estimates in recent quarters have jumped in the weeks after quarter-end, once companies start reporting.

Timmer says a repeat of that bounce could put Q3 growth at 30% to 35%. Meanwhile, stocks have already pushed to an S&P 500 record high above 7,800.

A strong quarter may not be enough on its own. Growth of 30% to 35% would extend the run of upward revisions. Yet the S&P 500 already sits at a record, so investors may want proof the pace can last.

Why Is Wall Street Paying Less for Faster Profits?

Timmer’s explanation rests on history.

“History shows that investors don’t tend to pay top multiples for peak earnings growth.”

Jurrien Timmer, Director of Global Macro at Fidelity, wrote on X.

Fidelity’s earnings and valuation chart, which uses data through Oct. 4, shows the pattern. Earnings growth near 23% around 2018 gave way to a roughly 24% drop in P/E.

The same happened after the 2021 reopening, when growth near 50% preceded a drop of about 33%.

S&P 500 earnings growth versus the change in P/E since 1987. Source: Jurrien Timmer

Meanwhile, forward earnings are expected to grow 20%, slower than the 28% trailing rate.

Schwab’s Kevin Gordon, the firm’s head of macro research and strategy, has flagged a risk to that growth. A single mega-cap capex miss, meaning a shortfall in AI capital spending, could disrupt earnings.

Gordon says the average S&P 500 stock fell 14% from peak to trough since early August.

AI stocks now carry much of the index, so one weak report could show whether the lower multiple was prudent.

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