Irrational Exuberance In S&P 500 FEMO?

Are analysts' earnings expectations for the S&P 500 irrationally exuberant? So far this year, FEMO (fabulous earnings momentum, as measured by actual earnings per share) has been soaring, while FOMO (fear of missing out, as reflected in P/E multiples) has been mostly retreating. Much of that earnings optimism is concentrated in the S&P 500 Information Technology sector, particularly the Semiconductors industry, where the AI investment boom has fueled extraordinary demand, pricing power, and profit margins. But can these conditions persist? Let's take a closer look:

(1) FEMO overwhelming FOMO. The S&P 500 is up 13.3% ytd, despite a 13.5% contraction in its forward P/E. That's because FEMO has overwhelmed waning FOMO, with forward earnings jumping 31.0% since the start of the year (chart).