Signs of easing geopolitical risks in the Middle East are shifting the core narrative in global equity markets back toward AI-driven fundamental earnings growth, prompting international financial giant HSBC Holdings PLC to raise its rating on the U.S. stock market. Wall Street heavyweights including Citigroup, JPMorgan, and BlackRock recently concurred that the geopolitical war theme is giving way to profit momentum, with AI-related capital expenditure and earnings recovery in tech companies returning as the market's central logic. HSBC senior strategist Alastair Pinder upgraded the U.S. equity market rating from "Neutral" to the most optimistic bullish rating equivalent to "Buy"/"Overweight," noting that AI-driven profit expansion momentum has "clearly turned positive." Pinder indicated that overall profits for the S&P 500 in the three months ending March are expected to grow 14% year-over-year, marking the fastest expansion pace since 2024. In a research report issued to clients on Tuesday, Pinder wrote, "With U.S. economic activity and earnings momentum appearing stronger, we have upgraded our market rating from Neutral to Overweight/Buy across the board." To fund this latest allocation adjustment, the strategist also downgraded the European equity market ex-UK to "Neutral," citing weaker economic growth activity and greater fundamental risks from elevated energy prices. As of Friday's market close, the S&P 500 had risen for four consecutive weeks, its longest weekly winning streak since October 2024, largely because traders increasingly ignored war-related noise between the U.S.-Israel and Iran. The core logic behind this is that a sustained ceasefire agreement lasting over two weeks between Washington and Tehran has boosted Wall Street's bullish confidence. Why are stock markets ignoring the war? The answer lies in the increasingly robust profitability displayed by companies during earnings season. As the U.S. earnings season began in mid-April, strong profit expansion expectations centered on AI computing infrastructure provided support. Furthermore, growing belief that the U.S., Israel, Iran, and Lebanon will soon reach a long-term stable ceasefire due to domestic pressures has made top Wall Street investment institutions like BlackRock, Goldman Sachs, and Morgan Stanley marginally more optimistic about the future equity market outlook. This highlights that major Wall Street banks view post-ceasefire valuation recovery, strong corporate earnings resilience, and upward revisions to tech company profits driven by the AI computing chain as evidence of significantly improved market risk appetite. Although the Middle East geopolitical storm is not over, Wall Street's bullish sentiment toward global equities has become more fervent. After initial sharp sell-offs, institutional investors appear to be filtering out war-related noise, no longer treating conflict as the "core variable determining market direction" as they did in early March, but instead largely "ignoring the war noise." Several Wall Street financial giants directly attribute the current market resilience to continuously upwardly revised corporate earnings expectations, particularly the strong profit outlook for tech companies closely linked to explosive demand for AI computing infrastructure, which remains uninterrupted by the conflict. As South Korea's benchmark KOSPI index, heavily weighted with Samsung and SK Hynix, hit a record high despite geopolitical pressures, and the Taiwan stock market, led by AI boom beneficiary and heavyweight TSMC, also reached a new peak, alongside a record 18-day winning streak for the Philadelphia Semiconductor Index and the S&P 500's four-week rally, investors are increasingly convinced that the "AI computing investment theme" can overpower all market noise, especially geopolitical noise. As shown in the accompanying chart, the U.S. stock market rebounded as Iran-related risks eased—by Friday's close, the S&P 500 had risen for four straight weeks. HSBC's senior strategist Pinder highlighted several key supportive investment logics. Pinder wrote, "With nearly 30% of U.S. companies having reported earnings, initial growth readings are encouraging, with 84% of companies beating Wall Street consensus expectations (above the 78% five-year average), beating estimates by an average of about 12%." "Meanwhile, valuations do not appear demanding." Additionally, stock buybacks have been providing a "steady but important tailwind." On the other hand, Pinder noted several areas warranting close attention, first among them being oil prices. He stated that tax refunds are currently cushioning the impact of high Brent crude prices. However, if oil prices remain near historically high levels after June—when typically 90% of refunds have been distributed—"consumer pressure in the U.S. market could intensify." If energy prices stay elevated, sector rotation should also be a focus. Although a lasting ceasefire could significantly ease oil prices, especially if traffic through the Strait of Hormuz returns to normal quickly, the broader effects of high Brent crude may still be priced in as a geopolitical premium. Earnings concentration is another area Pinder advised traders to monitor closely, pointing out that AI chip leader Nvidia and memory giant Micron are expected to contribute a "significant portion" of the S&P 500's overall profit growth. Higher earnings and market capitalization concentration increases risk, but Pinder noted that this skew could still favor an upward trajectory within a bullish context. Wall Street is already ignoring all noise! A new bull market driven by the "AI bull narrative" is underway. The mainstream asset allocation direction on Wall Street is shifting back from "geopolitical safe-haven trades" to "bull market themes driven by AI computing-powered profit expansion." As model scale, inference chains, and multimodal/agentic AI workloads push computing resource consumption to expand exponentially, tech giants' capital expenditure is increasingly concentrating on AI computing infrastructure amid surging demand. Global investors continue to anchor the "semiconductor stock bull narrative"—centered on Nvidia, Google's TPU clusters, AMD's new product iterations, and AI cluster delivery expectations—as one of the most certain growth investment narratives in global equity markets. This also means investment themes closely related to AI training/inference, such as power, liquid cooling systems, and optical interconnect supply chains, will remain among the stock market's hottest sectors, following AI computing leaders like Nvidia, AMD, Broadcom, TSMC, and Micron, even amid Middle East geopolitical uncertainty. Forecast data recently released by Bank of America strategists indicates that, driven by accelerated growth in core global AI supply chain leaders (led by Nvidia, Broadcom, TSMC, and Marvell Technology) and areas like memory/logic chips, 2.5D/3D advanced packaging, and data center power chains, the global semiconductor market will reach $2 trillion by 2030, with a projected CAGR of 20% from 2025 to 2030. In contrast, the global semiconductor market size remains below $1 trillion until at least 2025. With the launch of Anthropic's Claude Cowork and the expected集中爆发 of autonomous super AI agent tools like OpenClaw by 2026, financial giants like Morgan Stanley believe the AI computing investment narrative is shifting from "AI GPU/ASIC-specific computing races" to "AI agent-driven full-stack artificial intelligence systems." In this narrative shift, data center CPUs and memory chips could be the biggest winners. HSBC upgraded U.S. stocks from Neutral to Overweight, core reasoning being that U.S. earnings momentum has "clearly turned positive," with Q1 profits expected to grow about 14% year-over-year; among reported companies, 84% beat expectations by an average of 12%. Citigroup also raised its U.S. stock rating from "Neutral" to "Overweight," emphasizing the rising contribution of U.S. AI tech prosperity to global profit growth, projecting about half of global EPS growth in 2026 to come from the tech sector. BlackRock, the world's largest asset manager, also upgraded U.S. stocks to "Overweight," citing controllable global growth disruption from Middle East conflicts and strong tech earnings expectations, with a clear preference for AI computing infrastructure, power equipment, and data centers—AI beneficiary chains. On target levels, JPMorgan raised its year-end S&P 500 target from 7200 to 7600, and increased its 2026 EPS forecast from $315 to $330 and 2027 from $355 to $385, partly due to AI-driven earnings upgrades and tech sector momentum, indicating Wall Street's主流资金 still believes the AI rally has further to run. If geopolitical conditions improve rapidly, JPMorgan suggests the index could approach 8000 by year-end. Morgan Stanley star strategist Mike Wilson also maintains a bullish analytical framework, arguing the recent U.S. stock rebound has fundamental support, having previously set a 2026 S&P 500 target of 7800. He views recent pullbacks more as corrections than the start of a bear market, while favoring cyclical stocks, high-quality growth stocks, and AI hyperscalers. As of Friday's close, the S&P 500 settled at 7165 points.
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