Jefferies: AI Rally Drives 80% S&P Gains

AI stocks contributed over 80% of the S&P 500’s YTD 2026 gains, with the index up only 2% without AI.
Jefferies finds the AI rally powered by a >30% rise in forward earnings estimates and a 38.5% EPS CAGR for 2026‑27 versus 11.9% for non‑AI sectors.
The AI basket trades at roughly 25× forward earnings and a PEG of 0.6, making it the cheapest U.S. sector on a PEG basis per Desh Peramunetilleke.
Q1 earnings showed an 86% beat rate, yet broader market failed to reward beats; analyst sentiment turned more positive with 58% of calls positive.