Most major assets have delivered positive returns so far in 2026 after a tumultuous March, according to Invesco’s midyear outlook, signaling that investors who stay committed to their investment strategies can benefit from market recovery. The broad-based gains across stocks, bonds, and commodities reflect underlying economic resilience despite geopolitical headwinds and energy market disruptions.
Artificial intelligence infrastructure investment is the primary engine driving this optimistic outlook, according to Morgan Stanley’s May 2026 midyear investment outlook. The firm notes that AI-related capex is boosting the outlook for risk assets, particularly U.S. equities, even as companies navigate challenges from Middle East tensions and elevated oil prices.
Corporate earnings have been the bedrock supporting market gains. S&P 500 first-quarter 2026 earnings grew 28% year-over-year, according to Charles Schwab, significantly exceeding the mid-single-digit expectations that prevailed earlier in the year. This earnings beat—with companies exceeding consensus estimates by 6%, the strongest rate in four years—suggests that underlying business health remains strong despite macro uncertainties.
Goldman Sachs has raised its earnings projections in light of this momentum. The firm projects S&P 500 earnings per share of $340 in 2026, a 24% increase from the prior year, according to its May 28, 2026 outlook. This robust earnings growth is expected to support equity valuations and drive returns across developed markets.
Morgan Stanley Research raised its year-end S&P 500 target to 8,000 from 7,800, with a mid-2027 forecast of 8,300, representing a 12% increase from the index’s level of 7,400 on May 12, 2026. Serena Tang, Morgan Stanley’s Chief Cross-Asset Strategist, emphasized that while investors should be constructive on equities, they should not be complacent: “AI can support earnings, but it can also put some pressure on credit markets.”
The scale of AI spending is reshaping capital markets. Morgan Stanley Research previously estimated that combined capital expenditures for the five largest U.S. technology companies would reach $450 billion in both 2026 and 2027. Following first-quarter earnings reports, those estimates have risen sharply to roughly $800 billion in 2026 and $1.16 trillion in 2027, underscoring the strategic importance of AI infrastructure investment.
Invesco’s analysis highlights that the global economy has remained resilient despite geopolitical fractures and energy supply disruptions. The firm expects global equities to deliver positive returns in 2026, supported by the AI investment boom and improved corporate earnings. Invesco notes that while the year began with broad market advances, leadership narrowed as uncertainty increased, but the firm continues to expect market participation to broaden beyond U.S. growth stocks as the year progresses.
Looking ahead, analysts expect earnings growth to persist. FactSet reported that estimated earnings growth for the S&P 500 in Q2 2026 stands at 21.9%, above the 18.7% estimate at the start of the quarter. This momentum, combined with moderating inflation and expectations of lower U.S. interest rates, is expected to support continued equity market gains through the remainder of 2026.
Sources
- Invesco — 2026 midyear investment outlook confirming most major assets have delivered positive returns after a tumultuous March, and analysis of market resilience and AI investment themes
- Morgan Stanley Research — May 15, 2026 midyear investment outlook on AI infrastructure investment boosting risk assets and raising S&P 500 targets; details on tech capex estimates
- Goldman Sachs — May 28, 2026 outlook projecting S&P 500 earnings per share of $340 in 2026, a 24% increase from prior year
- Charles Schwab — First quarter 2026 earnings tracking at 28% year-over-year growth with 6% beat rate
- FactSet — Q2 2026 estimated earnings growth for S&P 500 at 21.9%
