Emerging-market profit forecasts hit record pace on AI boom

Earnings estimates for emerging-market companies are climbing at the fastest pace on record as analysts rush to upgrade forecasts for firms positioned to benefit from the global artificial intelligence infrastructure buildout.

The average 12-month profit forecast for the MSCI Emerging Markets Index rose for a 19th consecutive day on Monday, pushing the cumulative increase in 2026 to 65% — nearly double the previous record set in 2009, according to data compiled by Bloomberg. The momentum has been so persistent that analysts have raised forecasts every day but one since June 19, Bloomberg reported.bloomberg

AI Spending Fuels Upgrades Across Asia

The rally in profit expectations is driven largely by companies in South Korea, Taiwan, and China that supply the semiconductors, electronic components, and industrial equipment underpinning U.S. hyperscaler spending on AI data centers. RBC Global Asset Management noted that this is the third consecutive year in which emerging-market earnings growth has outpaced the MSCI World Index, propelled by an industrial supercycle spanning AI capital expenditure, energy transition, and defense spending.rbcgam

The breadth of upgrades has widened over the course of the year. By late April, analysts had already lifted profit projections for emerging-market firms by roughly 30%, compared with about 10% for the S&P 500, according to Yahoo Finance. Asian companies led with a 35% increase, while Latin American forecasts rose more than 20% on commodity strength. The Calamos Emerging Economies Strategy returned 35.21% gross of fees in the second quarter, outperforming the MSCI Emerging Markets Index's 24.15% return, with outperformance driven by overweight positions in industrials and information technology.seekingalpha+1

China's Earnings Boom Meets Market Skepticism

China's corporate sector has contributed to the broader momentum, with second-quarter profits surging 25.7% — the fastest pace in nearly five years, according to data from China International Capital Corp cited by Zacks. High-tech manufacturing, electronics, and AI-linked industries drove the gains, with profits on the STAR board jumping 370%.tradingview

Yet the earnings strength has not translated into equity gains in China. The CSI 300 slipped about 9% in the third quarter through early September, while the STAR 50 Index fell 29%, as investors weighed the concentrated nature of profit growth against weak domestic consumer demand and a prolonged property downturn. Beijing's $54 billion capital injection into state-owned banks and insurers signals officials' intent to stabilize the financial system, though analysts say it also underscores the depth of the challenges ahead.tradingview