New York Stock Exchange, expected to continue an upward trend amid strong corporate earnings

Amid geopolitical tensions and unstable energy supply and demand, Wall Street expects the upward trend of the U.S. stock market in New York to continue in the short term. The core support for the market is not uncertainty itself, but rather that, amid this uncertainty, U.S. corporate performance has far exceeded expectations.

According to Bloomberg, a market strategy team led by Morgan Stanley’s Chief U.S. Equity Strategist and Chief Investment Officer Mike Wilson predicted in a report on the 13th (local time) that the S&P 500 index could rise to 8,300 points within the next 12 months. This is 12% higher than the previous trading day’s closing price. Wilson also raised his year-end target price from the previous 7,800 points to 8,000 points. The upward revision of target prices in the securities industry is not purely based on expectations but reflects that performance improvements have been confirmed in actual data.

In fact, the first quarter of this year saw the performance of major U.S. companies far surpass market expectations. Statistics show that, so far, the net profits of S&P 500 constituent companies that have reported earnings increased by 27% compared to the same period last year. Considering that initial Wall Street analyst expectations were around a 12% growth rate, this exceeds expectations by more than double. Morgan Stanley explained that, despite geopolitical risks, concerns about the private lending market, and industry restructuring shocks brought by artificial intelligence, the resilience of corporate profits supports a bullish outlook. Notably, although profit growth in the first quarter was concentrated in some large tech companies, future profit growth and market dominance could broadly spread to other industries.

This optimism has also been confirmed by other investment institutions. Ed Yardeni, Chief Investment Strategist at Yardeni Research, recently raised his year-end forecast for the S&P 500 index from 7,700 to 8,250 points in an investment report. Meanwhile, some assessments believe that the stock prices of leading large-scale data center operators are not yet excessively expensive. This aligns with the interpretation that the recent stock market rally is not solely driven by overheated themes, but is based on structural changes such as expanded artificial intelligence investments and improved corporate profitability.

However, cautious voices should not be ignored. The recent strong performance of the New York stock market driven by the AI boom has been compared to the situation before the dot-com bubble burst in 2000. Michael Burry, a well-known short seller depicted in the movie “The Big Short,” recently published an article on the online platform Substack warning that the valuation of the Nasdaq index—i.e., the price level relative to corporate earnings—has soared to an unsustainable level. He warned that a market downturn cannot be ruled out. Ultimately, while the current stock market is supported by strong earnings and expectations for AI, it also bears the risk of high stock prices and external shocks. The future trend may depend on whether U.S. corporate profit growth can truly extend beyond tech giants, and how much impact the Middle East situation and energy price instability will have on the overall financial markets.