For Corporate America, the hurdle to produce earnings growth that satisfies Wall Street's bulls keeps rising.

While third-quarter projections appear firm for the S&P 500 Index, 10 of the 11 sectors in the gauge are anticipated to record a slowdown in the pace of earnings growth compared with the prior three-month period, according to data compiled by Bank of America Corp.

And forecasts further out are sketching a somewhat gloomier picture for the top-down figure. Analysts expect S&P 500 income growth to decelerate to 18% in the first half of 2027 from 25% in the third quarter of 2026 and 28% in the fourth quarter, data compiled by Bloomberg Intelligence show.

While on their own, the darkening outlooks are not enough to knock the stock market rally off course. But with equities sitting near records and concerns mounting that inflation pressures are more stubborn than expected, Corporate America will confront a formidable challenge of delivering results robust enough to propel stocks to yet another record.

"We see early signs that earnings momentum may be peaking," said Luca Paolini, chief strategist at Pictet Asset Management. "With the bar for earnings growth set so high, even modest disappointments could trigger brutal market reactions."

For years, earnings season has offered a dependable antidote to most stock market troubles, with signs of reassurance in Corporate America's fundamentals lifting the benchmark equities gauge higher. Since the start of 2021, the S&P 500 has delivered a 15.2% annualized return during the periods when its companies reported quarterly scorecards, well above the long-term average, data compiled by Bloomberg Intelligence show.

By any measure, the 25% earnings growth expected in the third quarter is outstanding, but that may not be sufficient to impress investors if companies' outlooks fall short of what is already priced into shares.

"Healthy 3Q beats are expected, but further upside likely depends on confidence that strong growth can extend into 2027," Bank of America strategists including Savita Subramanian wrote in a note to clients. The bank's data show healthcare is the only sector expected to see an acceleration in year-over-year profit growth in the third quarter from the period before.

Lately, investors have been in a less-forgiving mood than usual. In four of the past six reporting cycles, the one-day stock reaction to earnings beats has been below historical median levels, while companies missing estimates have faced steeper than usual penalties, according to Andrew Tyler, head of global market intelligence at JPMorgan Chase & Co.

If history is any guide, the peak in earnings growth by itself matters less than where S&P 500 profits settle afterward, data compiled by Franklin Templeton show. Since 1980, the S&P 500 has gained 19.6% on average in the year after peak EPS growth, assuming EPS growth continued to be above 10%. However, when net income growth fell below that level, the index has gained only 6.1% in the next 12 months.

So far, 12-month estimates indicate that S&P 500 profit may advance around 18% in the next 12 months, suggesting investors have little to worry about. But with long-term borrowing costs at the highest in decades, questions swirling around the hundreds of billions of dollars spent on AI infrastructure and the broader stock market sitting near record highs, there is no room for error.

"Frothier market leadership raises the risk that guidance misses will be penalized more severely and elevated yields tie market returns more closely to earnings delivery, making it more important than usual that companies beat consensus over the next several weeks," Barclays strategist Venu Krishna wrote in a note to clients.

Investors' confidence in the durability of the stock market rally hinges largely on sky-high expectations from the tech giants that have driven the lion's share of growth over the last few years. Third-quarter earnings in the information technology sector are expected to jump 66%, BI data show, bringing the full-year figure to 63%.

In 2027, the pace of profit growth in the sector will likely slow to 39%, estimates show. Next year will likely mark a peak in the AI capex cycle, strategists at Wells Fargo including Ohsung Kwon said in a note to clients, adding that it becomes "increasingly difficult" for hyperscalers to justify another year of massive expenditures on the technology.

To be sure, there are reasons for optimism heading into the reporting season. For one, the S&P 500 is trading at just over 19 times forward earnings, down from 21 times before the previous earnings season, data compiled by Bloomberg show.

Lower valuations can make it easier for companies to generate positive share-price reactions when they beat estimates and raise guidance, offering some cushion against the high expectations that have built up around corporate profits, analysts say.

"We like to see cheaper multiples at the outset of reporting season; lower valuations tend to clear a path for more positive share price reactions to raised guidance, all else equal," Krishna wrote. "This would be an improvement from last season, when share price reactions to good results were quite weak."