Ross Gerber uses Alphabet and Amazon to argue S&P 500 earnings growth is less broad than it looks

Investor Ross Gerber made a focused argument about what lies behind headline S&P 500 earnings momentum, pointing to the role of Alphabet and Amazon in the index’s second-quarter results. In a recent market note carried by Yahoo Finance, Gerber said that if investors “take out” Alphabet and Amazon, the picture of S&P 500 earnings growth becomes “far less impressive.”

The core of Gerber’s message is concentration. Rather than treating the index’s overall earnings gains as a sign of widespread improvement across the market, he emphasized that a substantial share of growth, at least in the second quarter, is linked to just a couple of very large companies. His point, as framed in the post, is that broad market narratives can be skewed when the biggest constituents swing the overall totals.

Alphabet, the parent of Google, and Amazon are both members of the S&P 500 and among its largest companies by market value. In Gerber’s view, their earnings performance helped lift aggregate index growth during the period in question. The argument is essentially arithmetic: when the same two companies account for a meaningful chunk of reported growth, removing them changes the index’s implied underlying trend.

Gerber’s note also highlights an issue that often comes up in earnings seasons, especially for index-based measures. The S&P 500 is a weighted index, so the largest firms can have outsized influence on whether the index looks healthy on a headline basis. That means an investor can see a “good” quarter for the S&P 500 even if a large portion of the rest of the market is contributing less than the headline suggests.

The Yahoo Finance report frames Gerber’s claim as supported by “data,” though it does not provide, in the information provided here, specific figures such as the exact percentage of earnings growth attributed to Alphabet and Amazon, or the quantified change to the index’s growth rate after excluding them. As a result, what can be verified from this report is the direction of Gerber’s conclusion, not the precise magnitude of the effect.

Alphabet and Amazon are widely followed for their mix of advertising, cloud services, commerce, and subscription offerings. That makes them especially sensitive to factors that can drive large earnings swings, such as changes in digital advertising demand, cloud spending, consumer spending patterns, and overall enterprise technology budgets. When these two businesses move, they can shift the mood not just for their own stocks, but also for the index totals that investors use as shorthand.

For the broader market, the implication is not automatically bearish, but it does point to a diagnostic question. If earnings growth is being propped up primarily by a few megacap companies, then the market’s durability depends on whether the rest of the index can “catch up” in subsequent quarters. If they cannot, then later periods could show more uneven results even if aggregate index figures continue to look acceptable in the short term.

Still, important details are not disclosed in the limited information available from this market note. The report does not specify the quarter-by-quarter composition of earnings growth, whether Gerber’s conclusion is based on year-over-year growth rates or sequential comparisons, or how he treats other large index constituents alongside Alphabet and Amazon. Without those specifics, readers should treat the claim as a perspective on concentration rather than a fully substantiated statistical breakdown in this particular excerpt.