Strategists at some of Wall Street’s biggest banks are upbeat on the outlook for US earnings after a positive start to the first-quarter reporting season.
The S&P 500 Index has climbed to a record high, brushing off concerns about the potential economic fallout from the Iran war. A surge in energy prices has boosted earnings prospects for oil companies, while renewed optimism over AI spending has boosted sentiment toward some tech stocks.
About 81% of large-cap US companies have beaten earnings-per-share estimates so far, according to data compiled by Bloomberg Intelligence. Banks dominated last week’s reporting, with JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Goldman Sachs Group Inc. notching record stock-trading revenue.
“Despite geopolitical risks, the earnings recovery remains intact driven by the return of positive operating leverage,” Morgan Stanley’s Michael Wilson said in a note, as sales rise faster than costs, boosting profits. The strategist pointed to accelerating EPS growth both on a trailing and forward basis as well as stability in earnings revisions as supporting an optimistic view.
At JPMorgan, Mislav Matejka said earnings projections were being revised higher across all key regions.
“While a renewed geopolitical escalation with meaningfully and consistently higher oil prices could weigh on earnings, Brent at $100 is still consistent with earnings upside,” Matejka wrote in a note. Brent crude has climbed 31% since the start of the Iran war and traded near $95 a barrel on Monday.
Over at Goldman Sachs, a team led by Ben Snider pointed to a more complex dynamic beneath the surface. Snider said narrow pockets of strength in analyst earnings revisions have powered the latest rally.
While consensus S&P 500 EPS estimates for this year and next are 4% above where they were in January, energy and information technology stocks account for almost all of the increase, the Goldman team said.
Only two names — Micron Technology Inc. and Exxon Mobil Corp. — together account for more than 60% of the consensus increase in 2026 S&P 500 EPS estimates since the conflict began, the strategists wrote. The median company in the index has seen no revision to 2026 earnings estimates in the past few months, they said.
“Just a handful of stocks has driven the vast majority of the upward revisions to S&P 500 earnings estimates in recent weeks,” Snider said.
The US equity benchmark index closed at a record high on Friday, wrapping up its strongest week of 2026. But the Goldman strategists said the gains, like the bullish earnings revisions, weren’t broad-based. The team’s preferred measure of market breadth has dropped to its lowest levels in recent decades, aside from the Dot Com bubble and mid-2023.
The test now is to see whether the heart of the first-quarter earnings season will lead to a broadening in upward profit revisions and in market strength. Progress in the potential reopening of the Strait of Hormuz is particularly key for economy-linked cyclical names.
Goldman projects S&P 500 EPS growth of 12% this year, broadly in line with top-down strategist consensus views, but below the 18% bottom-up consensus forecast. Risks are two-sided and skewed to the upside, the strategists wrote. Downside threats are weaker consumer demand and higher input costs linked to the war, while potential positives are tied to AI investment and productivity growth.
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