Industrials Lead S&P 500 Earnings Beat on Defense, AI Demand

US industrial companies delivered the biggest earnings surprise of any sector last quarter, with profits topping estimates as defense demand, commercial aerospace and artificial intelligence-related capital spending powered results.

Industrial companies in the S&P 500 index beat estimates by 24% on average, as geopolitical tensions and increased law enforcement activity in the US drove demand for aerospace and defense stocks. Machinery and electrical equipment companies also beat expectations as AI-driven spending and infrastructure projects gained traction.