Morgan Stanley: Tech Earnings Are Overpowering Iran War Fears for Global Stocks

EcoPulse24 | Dubai

Strategists at Morgan Stanley say strong US corporate earnings - driven by a resilient technology sector - are eclipsing concerns that the Middle East conflict could weigh on equity markets, with earnings revisions for the S&P 500 moving higher across multiple time horizons over the past month.

The assessment, published Monday in a note led by Morgan Stanley strategist Michael Wilson, comes as the first-quarter reporting season delivers its strongest median earnings surprise in four years.

Key Data Points - Source: Bloomberg, Morgan Stanley, May 4, 2026

Tech and Semiconductors Lead the Way

Wilson identified hyperscalers and semiconductor companies as "major contributors to this durability," benefiting from accelerating cloud demand and solid order backlogs. Critically, the Morgan Stanley team noted that earnings strength is not confined to technology alone - upward revisions have also picked up across financials, industrials, and consumer cyclicals, signaling what Wilson described as a more durable expansion in profit growth rather than a narrow, sector-specific rally.

Iran War: Uneven, Not Systemic

On the Middle East conflict, Morgan Stanley's assessment is measured. The impact of the Iran war on corporate earnings is expected to remain uneven rather than systemic, with cost pressures affecting companies on a case-by-case basis rather than weighing on entire sectors. Energy companies, meanwhile, represent a tailwind for overall earnings as elevated oil prices boost their profit growth - a dynamic directly relevant to Gulf-linked portfolios and sovereign wealth funds tracking global equity exposure.

Goldman Sachs: AI Spending Shows No Signs of Slowing

Goldman Sachs strategists led by Ben Snider added weight to the bullish earnings picture, noting that the spending boom on AI infrastructure is showing no signs of slowing. Analysts have further ramped up their estimates for hyperscaler capital expenditure since the start of earnings season. "The surge in spending estimates is driving a similar rise in earnings estimates for AI infrastructure companies, helping lift the earnings outlook for the broad market and skewing risks to our S&P 500 EPS estimates to the upside," Snider and his colleagues wrote.

The Concentration Risk

Despite resilient earnings and US stocks at all-time highs, concentration risks remain a concern. Seven stocks have generated approximately 80% of S&P 500 returns since the start of 2026 - a dynamic that Morgan Stanley flags as a headache for investors seeking broad market exposure rather than concentrated technology bets.