Despite increasing concerns about global politics, energy costs, and lending, Morgan Stanley’s Serena Tang believes the firm continues to see potential for growth in risk assets through the end of 2026.
In the latest episode of Thoughts on the Market, Tang explained that the bank anticipates the US economy and company profits will stay strong. They also believe spending on artificial intelligence (AI) will continue to fuel significant investment in various sectors.
Tang says the current macro backdrop still supports risk assets.
Generally, economic conditions are favorable for investments in various markets. Specifically, the US economy is expected to remain strong.
In my research, I’ve noted that Morgan Stanley is predicting strong performance for US stocks and anticipates continued growth in company earnings. It’s a notably optimistic outlook that I’m keeping a close eye on.
Our experts predict the S&P 500 will reach 8,300 by mid-2027, driven by strong earnings growth. We anticipate earnings will increase by 23% in 2026 and 12% in 2027, and this positive trend is the primary reason for our optimistic outlook.
According to Tang, investment in data centers, chips, power, and networking related to AI is predicted to continue being a major trend. However, this surge in spending might also strain credit markets, as companies borrow more money to fund their growth.
Morgan Stanley says it continues to favor US equities over core fixed income.
We suggest a portfolio that leans towards growth, with a larger portion in stocks and a smaller portion in traditional bonds. We recommend keeping investments in areas like commodities and cash at typical levels. Specifically, we believe U.S. stocks are currently the most attractive due to strong company profits and potential for gains. While Europe and Japan also have potential, Europe is more vulnerable to energy issues, and emerging markets haven’t shown consistent strength across the board.
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2026-05-20 16:43