Goldman Sachs Research: Alphabet Conviction, Q2 Earnings Reactions & MSCI Rebalance

This daily note highlights that while 64% of companies are beating EPS estimates, the market is largely unrewarding beats. Additionally, Goldman Sachs reaffirms conviction in Alphabet following its Gemini/hardware event and details $35bn+ in expected gross passive flows from the MSCI August 2026 index rebalance.

Key Takeaways

• 1.The Q2 earnings beat rate is near record highs at 64%, but markets are failing to reward beats (+20bps excess return vs +95bps historically) or harshly punish misses (-118bps vs -211bps historically).
• 2.Goldman Sachs raised conviction in Alphabet following its hardware keynote, citing its advantages in distribution, diversified monetization strategies, and infrastructure scale.
• 3.MSCI's August 2026 index review will trigger over $35bn in gross two-way flows across APAC/GEM markets, with Japan, India, and Taiwan seeing the largest net passive inflows.

Table of Contents

• 1) Earnings Beat a High Bar but Were not Rewarded
• 2) Increasing our Conviction in Alphabet
• 3) MSCI Rebalance Implications

Report data

1-day excess return vs. S&P for EPS Beats and Misses

Reports in this series

What Matters Today is shown in chronological order through this edition, published on August 13, 2026.

Part of the What Matters Today series — view all 9 editions

1. Apr 23GS - What Matters Today CTAs are Small Buyers While Pensions are Large Sellers, What if Growth Slows , Software Rally, Where Does Potential Growth Stand - 23Apr26
2. Apr 27GS - What Matters Today Jared Cohen’s views on the Middle East, Market Views, Semi Software, What Happens After Pension Sell a Ton of Equities - 24Apr26
3. May 12GS - What Matters Today One of the Sharpest Risk Appetite Rebounds Ever, Worst Day of Underperformance for US Consumer in 4y, AI Agents, Intangible Capital, and the Next Superstars, What’s Behind the Recent Core
4. May 20GS - What Matters Today NVDA Tonight, HFs Selling US Semis and Buying Asia, Relevant Announcements from Google’s I O - 20May26
5. Jun 29GS - What Matters Today S&P 500 Q2 2026 earnings season preview
6. Jul 8GS - What Matters Today: Momo Selloff as Large as COVID Reopening but Positioning Still High, OpenAI to Release New Model Tomorrow, A Macro Guide to the Micro World - 8Jul26
7. Aug 10GS - What Matters Today - Equity issuance is a headwind but not a gale^J Equity Vol is Resetting^J Meta Releases Scaled-Down AI Model Consumers for Home Use

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