BlackRock (BLK) is turning more positive on U.S. stocks, as it now sees the hit to global growth from the Middle East conflict as limited. The firm has moved back to an overweight stance, after cutting risk earlier in the year when tensions first rose.
Claim 55% Off TipRanks
New trading tool for SPY bullsAccording to strategists led by Jean Boivin, the key signals they were watching have now appeared. These include signs that shipping through the Strait of Hormuz is resuming and that the wider economic impact of the war is contained. “We have seen developments on both fronts,” the team said, adding that a recent ceasefire is “important,” while the bar for a return to conflict is “high.”
As a result, BlackRock now sees a clearer path for markets to focus on fundamentals again, rather than on geopolitical risk.
Meanwhile, BLK shares rose 2.44% on Monday, closing at $1,023.65. The company is also due to report Q1 earnings on Tuesday before the market opens.
Earnings and AI Drive the Bullish View
At the same time, the firm points to a stronger earnings backdrop as a key reason for its shift. “Corporate earnings expectations are up even through the conflict, partly on the AI theme,” the strategists wrote. This marks a change from past quarters, when analysts often cut forecasts as earnings season approached.
Now, Wall Street is doing the opposite. Estimates are rising, with support from oil and semiconductor firms. BlackRock highlights that U.S. stocks offer “earnings bright spots,” with tech leading the way.
In particular, semiconductor companies are expected to post a major jump in profits. BlackRock forecasts an “80% boost to semiconductor stock earnings this year,” which is helping drive upgrades across the tech sector. This trend is also spilling into global markets, as AI hardware makers in South Korea and Taiwan lift earnings expectations in emerging markets.
Valuations Ease as Market Recovers
Meanwhile, U.S. stocks have already bounced back from earlier losses tied to the conflict. The S&P 500 (SPY) has recovered most of its drop since late February, helped by signs of a possible de-escalation and renewed talks.
At the same time, valuations in the tech sector have cooled. BlackRock notes that the forward valuation gap between tech and other sectors is now at its lowest level since mid 2020. This follows a pullback that has brought prices closer to levels seen before the AI-driven rally.
In addition, broader global trends are also shaping the outlook. BlackRock points to rising demand for defense, energy security, and supply chain strength. These shifts, along with the push for AI, are expected to support long-term demand for power and infrastructure.
Overall, BlackRock said that “contained damage to global growth from the Mideast conflict and strong earnings expectations – particularly in tech – keep us risk on.”
Is BLK a Good Stock?
Turning to the Street, BlackRock holds a Strong Buy consensus, based on 12 analysts’ ratings. The average BLK stock price target is $1,230.50, implying a 20.21% upside from the current price.
