HSBC analysts Willem Sels and Lucia Ku highlight that while recent mega IPOs and concerns over stretched valuations have drawn market attention, solid earnings growth across most S&P 500 sectors—driven by AI-related demand—continues to support US equities [1]. The analysts note that positive earnings momentum is expanding beyond the traditional technology and communications sectors, with Energy and Materials also benefitting from increased data centre construction required for AI innovation [1].
Consensus earnings growth forecasts for 2026 are reported to exceed 10% across most sectors, with an overall growth forecast of 23%, except for Consumer Staples and Real Estate [1]. HSBC also points out that the US market is less exposed to downside risks from the Middle East conflict compared to other regions [1].
Given these factors, HSBC maintains an overweight position on US equities and expresses increased bullishness on the US dollar. The analysts view any short-term market volatility as a buying opportunity, while recommending diversification with quality bonds, gold, and alternative assets [1].
CONCLUSION
HSBC sees broad-based, AI-driven earnings growth as a key support for US equities, outweighing concerns over valuations and recent IPO activity. The bank's analysts remain optimistic, viewing volatility as a chance to add exposure, and recommend a diversified approach to asset allocation.