Archive · 3 Oct 2026
Jefferies Sees AI-Driven IT Earnings Soaring, Warns of Risks
Jefferies says companies that make technology products could have much higher earnings this year.
It expects the IT sector’s earnings to grow by 65.1% in the third quarter of 2026.
Companies that make semiconductors are expected to grow especially quickly.
A lot of this growth is linked to businesses spending money on artificial intelligence.
But Jefferies says investors should ask whether that spending can keep going and whether it will pay off.
The report also points to rising government bond yields.
Higher yields can make investors less willing to pay high prices for company shares.
So strong technology earnings are facing a possible challenge from higher interest rates and questions about AI investment.
Jefferies forecasts 65.1% third-quarter 2026 earnings growth for the IT sector, up from 22.3% a year earlier.
Semiconductors are forecast to lead IT sub-industries with 131.7% earnings growth; semiconductor materials and equipment are forecast at 68.9%.
LSEG I/B/E/S data as of September 25 put expected S&P 500 third-quarter earnings growth at 30.2%, versus 16.1% a year earlier.
Jefferies says investors should question how long AI-related capital spending can continue and whether it will earn adequate returns.
US Treasury yields reached reported highs not seen since 2002, potentially adding pressure to equity valuations.
- Who
- Jefferies, including analyst Chris Wood, and companies in the US IT sector.
- What
- A report forecasts strong IT earnings growth driven by AI investment while warning about the durability and returns of AI spending and rising bond yields.
- When
- The report was dated October 1, 2026; earnings forecasts used data as of September 25.
- Where
- The United States, including the S&P 500 and US Treasury markets.
- Why
- AI-related capital expenditure is supporting earnings, but Jefferies says its duration and returns are uncertain and rising yields may weigh on equity valuations.
- Report
- Jefferies GREED & fear report, dated October 1, 2026
- IT earnings forecast
- 65.1% year-on-year growth for the third quarter of 2026, compared with 22.3% a year earlier
- S&P 500 forecast
- 30.2% third-quarter 2026 earnings growth, according to LSEG I/B/E/S data as of September 25
- Semiconductor forecast
- 131.7% earnings growth
- Semiconductor materials and equipment forecast
- 68.9% earnings growth
- Treasury yields cited
- 10-year at 5.34%, 30-year at 5.69%, and two-year at 4.96%
- Key risks identified
- How long AI capital expenditure can continue, whether it will deliver adequate returns, and the implications of rising government bond yields