The world's largest asset manager BlackRock has upgraded United States equities to “overweight”, arguing resilient corporate earnings - particularly in technology - will limit the economic fallout from the Middle East war and support further gains in global markets.
In a weekly note published by the BlackRock Investment Institute, strategists said the expected damage to global growth from the conflict was “likely contained”, prompting a shift from a neutral stance adopted earlier this year as geopolitical risks escalated.
The upgrade aligns the asset manager with other Wall Street banks that have turned more constructive on equities despite ongoing tensions.
The call rests on two developments identified by BlackRock: early signs of stabilisation in energy markets, including resumed flows through the Strait of Hormuz, and evidence that macroeconomic impacts remain limited.
The firm also cited a fragile ceasefire and renewed diplomatic contact between Washington and Tehran as reducing the probability of sustained escalation.
Markets have responded to the shifting outlook.
The S&P 500 has risen 8% from a seven-month low in late March, when fears of supply disruption and a spike in oil prices weighed on sentiment.
The index edged higher again on Monday as investors turned their focus to the upcoming earnings season.
BlackRock said corporate earnings expectations have strengthened even as the conflict persisted.
First-quarter profit growth for S&P 500 companies was estimated at 13.9% as of April 10, up from 12.7% prior to the outbreak of hostilities.
The firm highlighted technology as a key driver, forecasting earnings growth of 43% for the sector in 2026, compared with 26% a year earlier.
“Tech’s valuation premium has been eroded,” Jean Boivin, head of the institute, said in the note, adding that lower relative valuations alongside stronger earnings expectations underpinned the upgrade.
BlackRock also pointed to an expected 80% increase in semiconductor earnings this year, driven by demand linked to artificial intelligence infrastructure.
The more optimistic stance echoes recent commentary from JPMorgan Chase & Co. and Morgan Stanley.
In a note available , strategist Mislav Matejka said geopolitical-driven sell-offs were likely to present buying opportunities, arguing that further escalation would be temporary.
Morgan Stanley’s Michael Wilson similarly characterised the recent decline in equities as a correction rather than the start of a prolonged downturn.
Valuations have also adjusted.
JPMorgan noted that the forward price-to-earnings ratio for the so-called “Magnificent Seven” technology stocks - including Nvidia, Apple and Microsoft - has narrowed to 1.2 times the broader market, down from 1.7 times, reflecting a partial unwind of earlier premiums.
BlackRock said it had also upgraded emerging market equities, citing earnings momentum in Asia’s semiconductor supply chain, particularly in South Korea and Taiwan.
The firm added that geopolitical fragmentation was likely to sustain investment in defence, energy independence and supply chain resilience, trends expected to support demand for infrastructure and power.
Additional data from indicates S&P 500 companies are on track to deliver double-digit profit growth in the first quarter, with historical trends suggesting final results could exceed initial forecasts if typical beat rates are maintained.
While risks tied to oil prices and regional instability remain, BlackRock said its base case assumes contained economic spill overs, allowing earnings growth and moderating valuations to anchor equity markets in the near term.
