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The third-quarter earnings season is approaching with a strong backdrop. Going by the latest Earnings Preview, the S&P 500 earnings are set to increase 24.6% year over year in the to-be-reported quarter on 11.6% higher revenues, marking the eighth consecutive quarter of double-digit earnings growth. More importantly, for investors seeking stocks with the potential to outperform expectations, the positive revisions trend has remained intact, with estimates for both the current and subsequent quarters moving higher.
Technology and Energy stand out in this environment. Per the earnings preview, third-quarter earnings are expected to rise 43.3% for Technology and 114.3% for Energy, putting both well ahead of the broader market. The semiconductor industry is particularly strong, with earnings projected to jump 85.5% on 62.8% higher revenues. Energy has received the most pronounced upward revision to its third-quarter earnings outlook since the quarter began, reflecting the impact of elevated oil prices following disruptions in the Persian Gulf.
Against this backdrop, Lam Research (LRCX - Free Report) , Taiwan Semiconductor Manufacturing (TSM - Free Report) or TSMC and Marathon Petroleum (MPC - Free Report) offer exposure to the two strongest industries with catalysts for potentially exceeding expectations.
Why AI and Energy Could Lead Q3 Earnings
The earnings story of the technology space is no longer dependent entirely on a handful of mega-cap companies. Per Zacks estimates, the technology space’s third-quarter earnings growth would still be 20.5%, excluding NVIDIA (NVDA - Free Report) , Micron and Alphabet, compared with 43.3% including them. Semiconductor earnings are expected to increase 85.5%, after growth of 110.1% and 96% in the preceding two quarters. That progression indicates that the AI investment cycle is continuing to translate into actual semiconductor demand rather than remaining solely a capital-spending narrative.
The underlying demand environment also remains unusually strong. Reuters reported in late September that the ongoing AI infrastructure investment boom is expected to remain a major driver of economic and corporate growth. Deutsche Bank strategist George Saravelos described the AI investment cycle as a key force supporting markets, while Reuters noted that roughly one-third of current U.S. GDP growth was estimated to be coming from the AI spending surge. The same analysis characterized the current AI capex boom as one of the largest since World War II.
The energy sector has received the strongest positive revisions to its third-quarter earnings outlook since the beginning of the quarter because of elevated oil prices related to the Persian Gulf situation. Energy earnings are now expected to rise more than 114%, substantially exceeding the growth expected for technology and the S&P 500.
Oil prices have remained elevated even as some Gulf exports have recovered. Reuters reported on Oct. 5 that Brent crude remained above $100 per barrel, with logistical constraints, higher tanker costs and limited refining capacity continuing to disrupt the global oil market. Reuters noted that tanker freight rates on some Middle East to Asia routes had surged dramatically, illustrating why physical-market disruptions remain important even as crude flows through the Strait of Hormuz recover.
3 Stocks to Buy Before Earnings
Lam Research: It is expected to have benefited from rising semiconductor capital intensity, particularly in memory and advanced packaging. The company generated $6.72 billion in fiscal 2026 fourth-quarter revenues, up 30% year over year, while adjusted EPS rose 35% to $1.82. Management guided for September-quarter revenues of $8.1 billion, plus or minus $400 million, and adjusted EPS of $2.15, plus or minus 15 cents.
The Zacks Consensus Estimate for fiscal first-quarter 2027 (ending September 2026) is pegged at $8.12 billion for revenues and $2.17 for EPS, suggesting year-over-year growth of 52.4% and 72.2%, respectively. LRCX is scheduled to report fiscal first-quarter results on Oct. 21 and carries a Zacks Rank #2 (Buy).
TSMC: It offers direct exposure to sustained AI accelerator demand through advanced-chip manufacturing. The company guided third-quarter revenues of $44.6-$45.8 billion and gross margin of 65%-67%. Its June quarter delivered $40.2 billion of revenues, up 33.7% year over year, with EPS of $4.31.
The Zacks Consensus Estimate for third-quarter 2026 revenues is pegged at $45.62 billion, and that for EPS is $4.45, implying year-over-year growth of 37.8% and 52.4%, respectively. TSMC is scheduled to report third-quarter results on Oct. 15 and carries a Zacks Rank #2.
Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise
Marathon Petroleum: It has the strongest earnings-revision story among the three. Its second-quarter Refining & Marketing adjusted EBITDA jumped to $6.66 billion from $1.89 billion a year earlier as crack spreads strengthened across regions. For the third quarter, MPC expects crude throughput of 2.82 million barrels per day, total refinery throughput of 3.005 million barrels per day and 94% utilization.
The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at $23.15 per share, indicating year-over-year growth of 669.1%. MPC is scheduled to report third-quarter results on Nov. 3 and carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Petroleum Corporation Price and EPS Surprise
View the Zacks #1 Rank List
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3 Stocks From AI & Energy to Buy Before Q3 Earnings Kick Off
Key Takeaways
The third-quarter earnings season is approaching with a strong backdrop. Going by the latest Earnings Preview, the S&P 500 earnings are set to increase 24.6% year over year in the to-be-reported quarter on 11.6% higher revenues, marking the eighth consecutive quarter of double-digit earnings growth. More importantly, for investors seeking stocks with the potential to outperform expectations, the positive revisions trend has remained intact, with estimates for both the current and subsequent quarters moving higher.
Technology and Energy stand out in this environment. Per the earnings preview, third-quarter earnings are expected to rise 43.3% for Technology and 114.3% for Energy, putting both well ahead of the broader market. The semiconductor industry is particularly strong, with earnings projected to jump 85.5% on 62.8% higher revenues. Energy has received the most pronounced upward revision to its third-quarter earnings outlook since the quarter began, reflecting the impact of elevated oil prices following disruptions in the Persian Gulf.
Against this backdrop, Lam Research (LRCX - Free Report) , Taiwan Semiconductor Manufacturing (TSM - Free Report) or TSMC and Marathon Petroleum (MPC - Free Report) offer exposure to the two strongest industries with catalysts for potentially exceeding expectations.
Why AI and Energy Could Lead Q3 Earnings
The earnings story of the technology space is no longer dependent entirely on a handful of mega-cap companies. Per Zacks estimates, the technology space’s third-quarter earnings growth would still be 20.5%, excluding NVIDIA (NVDA - Free Report) , Micron and Alphabet, compared with 43.3% including them. Semiconductor earnings are expected to increase 85.5%, after growth of 110.1% and 96% in the preceding two quarters. That progression indicates that the AI investment cycle is continuing to translate into actual semiconductor demand rather than remaining solely a capital-spending narrative.
The underlying demand environment also remains unusually strong. Reuters reported in late September that the ongoing AI infrastructure investment boom is expected to remain a major driver of economic and corporate growth. Deutsche Bank strategist George Saravelos described the AI investment cycle as a key force supporting markets, while Reuters noted that roughly one-third of current U.S. GDP growth was estimated to be coming from the AI spending surge. The same analysis characterized the current AI capex boom as one of the largest since World War II.
The energy sector has received the strongest positive revisions to its third-quarter earnings outlook since the beginning of the quarter because of elevated oil prices related to the Persian Gulf situation. Energy earnings are now expected to rise more than 114%, substantially exceeding the growth expected for technology and the S&P 500.
Oil prices have remained elevated even as some Gulf exports have recovered. Reuters reported on Oct. 5 that Brent crude remained above $100 per barrel, with logistical constraints, higher tanker costs and limited refining capacity continuing to disrupt the global oil market. Reuters noted that tanker freight rates on some Middle East to Asia routes had surged dramatically, illustrating why physical-market disruptions remain important even as crude flows through the Strait of Hormuz recover.
3 Stocks to Buy Before Earnings
Lam Research: It is expected to have benefited from rising semiconductor capital intensity, particularly in memory and advanced packaging. The company generated $6.72 billion in fiscal 2026 fourth-quarter revenues, up 30% year over year, while adjusted EPS rose 35% to $1.82. Management guided for September-quarter revenues of $8.1 billion, plus or minus $400 million, and adjusted EPS of $2.15, plus or minus 15 cents.
The Zacks Consensus Estimate for fiscal first-quarter 2027 (ending September 2026) is pegged at $8.12 billion for revenues and $2.17 for EPS, suggesting year-over-year growth of 52.4% and 72.2%, respectively. LRCX is scheduled to report fiscal first-quarter results on Oct. 21 and carries a Zacks Rank #2 (Buy).
Lam Research Corporation Price and EPS Surprise
Lam Research Corporation price-eps-surprise | Lam Research Corporation Quote
TSMC: It offers direct exposure to sustained AI accelerator demand through advanced-chip manufacturing. The company guided third-quarter revenues of $44.6-$45.8 billion and gross margin of 65%-67%. Its June quarter delivered $40.2 billion of revenues, up 33.7% year over year, with EPS of $4.31.
The Zacks Consensus Estimate for third-quarter 2026 revenues is pegged at $45.62 billion, and that for EPS is $4.45, implying year-over-year growth of 37.8% and 52.4%, respectively. TSMC is scheduled to report third-quarter results on Oct. 15 and carries a Zacks Rank #2.
Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise
Taiwan Semiconductor Manufacturing Company Ltd. price-eps-surprise | Taiwan Semiconductor Manufacturing Company Ltd. Quote
Marathon Petroleum: It has the strongest earnings-revision story among the three. Its second-quarter Refining & Marketing adjusted EBITDA jumped to $6.66 billion from $1.89 billion a year earlier as crack spreads strengthened across regions. For the third quarter, MPC expects crude throughput of 2.82 million barrels per day, total refinery throughput of 3.005 million barrels per day and 94% utilization.
The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at $23.15 per share, indicating year-over-year growth of 669.1%. MPC is scheduled to report third-quarter results on Nov. 3 and carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Petroleum Corporation Price and EPS Surprise
Marathon Petroleum Corporation price-eps-surprise | Marathon Petroleum Corporation Quote