Record Profits, Hidden Risks: Why Peak Corporate Earnings Could Signal Trouble Ahead

The S&P 500 rally is supported by record corporate profits, but equity prices have risen faster than underlying earnings growth. Alphabet and Amazon's reported net-income gains are partly driven by unrealized equity-investment gains rather than core operating performance, widening the divergence between profits and cash flow. The trend raises valuation and earnings-quality risks for large-cap technology stocks and the broader index.