Morgan Stanley’s Wilson remains bullish: Strong earnings support, U.S. stocks still have room to rise in 2026.

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Despite U.S. stocks facing risks such as trade tensions and government shutdowns this year, Wall Street institutions like Morgan Stanley still maintain a bullish stance, believing that robust corporate earnings growth will drive the market higher by 2026, while uncertainty over interest rates and policy disruptions are only short-term obstacles.

On November 10, according to media reports, Morgan Stanley strategist Michael Wilson pointed out that there are "clear signs" that corporate earnings are recovering, and U.S. companies are enjoying better pricing power. He also noted that earnings expectation revisions have bottomed out, meaning that the number of analysts lowering expectations relative to those raising them has reached a turning point.

Wilson stated in a research report that although Federal Reserve policy guidance and the government shutdown are putting pressure on stock prices in the near term, these are only temporary obstacles on the robust path toward earnings-driven market growth in 2026. The S&P 500 index has risen 14% this year, poised to achieve growth for a third consecutive year.

Meanwhile, this earnings season has far exceeded expectations. According to Bloomberg Intelligence data, the profits of S&P 500 constituent companies grew nearly 15% in the third quarter. Many investment bank strategists expect tech companies to once again drive the bulk of U.S. earnings growth next year. UBS predicts the S&P 500 will reach a record 7,500 points by the end of 2026, up more than 11% from current levels.

Earnings prospects improve; tech stocks remain the engine

Multiple indicators confirm the trend of improving corporate earnings.

An index compiled by Citigroup shows that since mid-October, the number of analysts raising earnings expectations has exceeded those lowering them. The market focus has now shifted to Nvidia, which will report earnings next week, as investors seek clues on the development trends of artificial intelligence.

UBS strategists predict tech companies will once again be the main driver of U.S. corporate earnings growth next year.

Oppenheimer Asset Management strategist John Stoltzfus said, it's still too soon to "give up" on chipmakers and AI prospects.

He believes that the current weakness in major indexes looks more like "trimming" or "fine-tuning" rather than the start of a more severe downturn.

Although comments from Fed Chair Powell expressing caution about the interest rate outlook once dampened market sentiment, and trade tensions and a prolonged government shutdown have weighed on the stock market, Wilson remains relatively optimistic, emphasizing that fundamentals will ultimately dominate market trends.

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