Morgan Stanley forecasts shallow market pullbacks amid strong earnings and AI-driven growth
Updated
Updated · MarketWatch · Apr 27
Morgan Stanley forecasts shallow market pullbacks amid strong earnings and AI-driven growth
11 articles · Updated · MarketWatch · Apr 27
S&P 500 companies are reporting positive earnings surprises at double the long-term average, with Q2 and 2026 estimates raised by 2% and 3% in April.
Capex growth is running at 10%, supported by tax incentives and AI data center expansion, while AI adoption among S&P 500 firms has risen to 25% in Q1 2026.
Morgan Stanley notes that passive investors remain under-risked and expects any market dips to be brief, with business cycle strength outweighing policy impacts ahead of the November mid-term elections.
How will passive investing's dominance change the next market crash?
What if AI's promised productivity gains are significantly delayed?
Are tech giants' massive AI investments creating a new economic bubble?
Can the AI-fueled market rally survive soaring inflation from Middle East conflict?
Can our power grid handle the AI boom without environmental consequences?
Will the Federal Reserve be forced to hike rates to combat rising inflation?