The earnings outlook for Japanese and US companies remains solid, but a slowdown in the US economy is being closely watched as a factor that could cause Japanese companies' earnings to fall below expectations. Japanese companies are expected to post increases in revenue and pretax profit in fiscal 2026, while rising raw-material and labor costs may slow profit growth.
In the Japanese and US equity markets, bullish views are widespread on the basis of expanding corporate earnings. Major Japanese companies are reportedly expected to post an 11% year-on-year increase in revenue and a 27% increase in pretax profit in fiscal 2026, while major US companies are expected to post increases of 13% and 33%, respectively, with earnings forecasts continuing to be revised upward.
However, cost controls, one factor supporting revenue growth, are beginning to weaken, and rising raw-material and labor costs may slow profit growth.
The slowdown in the US economy is cited as a current risk. AI investment, particularly in data centers, has been one factor supporting the economy, but a slowdown in its expansion could affect global investment trends. Capital expenditure by major hyperscalers is expected to rise 80% year on year in 2026 and 20% in 2027, with total spending projected to exceed $1 trillion.