Global Equity Investor Insight | August 2026

Aug 21, 2026
Jeremy Richardson 80 x 80.jpg
Jeremy Richardson

What is on the Q2 scorecard?

Jeremy Richardson unpacks the Q2 earnings scorecard, identifying the standout winners, how easing CapEx concerns are shifting investor confidence and why opportunity may be broadening well beyond technology.

Highlights

  • Cloud hyperscalers are emerging as one of the Q2 winners. Whether their data centres run a few expensive LLMs or a multitude of cheaper open-weight models, the growth in AI usage is what drives their business.
  • CapEx concerns are easing as companies begin to articulate stronger returns on investment, with 2027 estimates jumping roughly 25% from $750 billion to $1 trillion.
  • Looking beyond technology, earnings estimates are beginning to show signs of positive delta, encouraging investors to open their minds, broaden their shopping list, and to look at the more neglected parts of the market.

Jeremy Richardson

Hello. This is Jeremy Richardson from the RBC Global Equity team here with another update. The Q2 earnings season continues to roll forward. It looks as though the scorecard, though, is becoming clearer.

One of the major groups of winners appears to be the major cloud computing hyper-scaling companies. Part of the reason for this is because of something that's been going on within the broader industry, but also some things which are a bit more company-specific. On the broader industry point, we've seen the emergence of smaller open-weight models which are giving the large language models a run for their money. The large language models are the most capable. They are the leading edge of technology, but they also can be quite expensive to operate. The smaller open-weight models provide an alternative for users, which actually reduces quite a significant amount of cost without a big compromise in terms of quality. Now, for the large language model companies, of which there are two major private ones still, this raises some question marks about the development of their particular industry. For the cloud computing companies, the hyper-scalers, they're rather agnostic to that because whether in their data centres, they're running large language models or a multitude of smaller open-weight models, it doesn't really matter so much for them. Because they are de-risked to this and instead geared very much into the growth of AI usage, these hyper-scalers are beginning to be seen as more as a group of winners because of this industry change.

The second thing, though, which is a bit more company-specific, is that a number of them have been able to articulate improving returns on investment. This is something that the market has been worried about because of the increasing amounts of CapEx going into the industry. Some of these increases are quite eye-watering. In fact, just this quarter, we've seen estimates of 2027 CapEx go up by around a quarter from about $750 billion to $1 trillion for next year. These are astonishing amounts. Of course, if the returns on investment on this CapEx is questionable, then obviously that's going to be bad news for the stocks and the company spending that money. The news from some of the companies is that they're beginning to see very strong returns on investment on the capital that they're putting in.

One of the major data points that I think is giving investors renewed confidence is the fact that the semiconductors, the chips going into these data centres, are not being fully utilised and exhausted after three years, as I think a lot of people were fearing not so very long ago, but actually have now got extended lives. They're proving more useful for longer. That creates more opportunity for the data centre companies to monetise that investment. Confidence in part of investors is improving for the future returns. As I say, these companies are beginning to show themselves as emerging winners as a result of the Q2 earning season. But it would be wrong to say that this is the only game in town. I think one of the underappreciated dynamics of this earning season is that we're actually now beginning to see improving estimates from other parts of the market as well. Now, to be fair, the rates of improvement are not quite the same as we continue to see in technology. Earnings estimates growth in that part of the market are well in excess of 50% for the next 12 months ahead.

But let's not discount what we're seeing in the broader part of the economy here either, because earnings estimates there are also beginning to show some signs of a positive delta. That is encouraging investors to open their minds, to broaden their shopping list, and to look at the more neglected parts of the market, which I would think is a very positive dynamic. I hope this has been of interest, and I look forward to catching up with you again soon.
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