The outlook for the stock market's most important driver just keeps getting better.

S&P 500 (^GSPC) earnings grew 6% in the first quarter from a year ago, according to data from FactSet. When excluding dismal earnings from Bristol Myers Squibb (BMY), the results were even better, with earnings growing 10%, per Bank of America.

This comes as earnings estimates for future quarters are on the rise too. Consensus now sees earnings growing 11.4% in 2024, up from a projection of 10.9% on April 5. For 2025, earnings growth estimates have moved up to 14.2% from the 11.6% growth seen that day.

On Tuesday, UBS Investment Bank US equity strategist Jonathan Golub boosted his year-end S&P 500 target to 5,600 from 5,400, citing "stronger earnings."

"While subsequent quarter earnings estimates typically decline during earnings season, [second quarter] estimates have also been quite robust," Golub wrote. "A similar pattern is also evident in full year 2024 estimates. These trends all support further market upside."

Earnings are one of several reasons Wall Street strategists have been boosting their S&P 500 year-end targets. Golub and others have noted that economic "tail risks" have declined, with consensus estimates for economic growth increasing throughout the year.

Deutsche Bank chief global strategist Binky Chadha recently told Yahoo Finance that more economic growth than expected could help the S&P 500 reach 6,000 by the end of the year. But for his current target of 5,500, a large part of the case is built around earnings growth that is "accelerating, and continues to accelerate."

"We see the earnings cycle having plenty of legs," Chadha wrote in a research note boosting his year-end S&P 500 target to 5,550 from 5,100 on May 17. "While all the growth may not materialize this year, we see market confidence in a continued recovery rising by year-end, supporting equity multiples."

Chadha, like other strategists, had been looking for a rotation in earnings growth to begin in the first quarter, with Big Tech's growth starting to slow and other areas catching up. That didn't quite happen. A basket of stocks Chadha tracks labeled "Mega-Cap Growth and Tech" grew about 39% compared to the year prior, roughly flat from the 40% year-over-year growth seen in the previous quarter.

This isn't an issue in itself, per Chadha. He believes the robust earnings growth seen in this group, which includes the "Magnificent Seven" tech stocks, among a few other big names like Netflix (NFLX), Visa (V), and Adobe (ADBE), is "extremely likely to slow at some point." And that will come as positive developments have been brewing under the surface in other pockets of the market.

Earnings for cyclicals and defensives grew at a 7.5% clip in the first quarter, which Chadha noted is "healthy." Other strategists believe a similar catch-up scenario is set to take place in earnings growth throughout the rest of this year.

Bank of America US and Canada equity strategist Ohsung Kwon highlighted in a recent research note that Nvidia drove 37% of the S&P 500's earnings growth over the past 12 months. In the next 12 months, it's expected to represent just 9%.

"We don't think it's just about Nvidia anymore," Kwon told Yahoo Finance. "Things are broadening out ... To power, commodities, utilities, things like that."

Strategists like Kwon say the most notable blip in the fundamental story for stocks has been cost-cutting driving earnings growth, not increased demand and booming revenues. Kwon and Bank of America remain steadfast in their belief this will change later this year as companies in the industrial sector have signaled they believe they've hit the trough of declining demand in their cycle.

"In the second half of the year, we're gonna start seeing that demand recover," Kwon said. "And with that, we're gonna see operating leverage and better margins."

Charles Schwab senior investment strategist Kevin Gordon noted that this will be a key trend for investors throughout the year. In the first quarter, companies that beat estimates for revenue outperformed those that just beat estimates on earnings.

To Gordon, this was the market singling out companies that were just increasing earnings through cost-cutting.

"The market tends to sniff [cost-cutting] out and say at some point, OK, now we have to actually see real demand come back online," Gordon told Yahoo Finance.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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