Stocks have pulled back since the Iran conflict began, yet the decline has been modest. The S&P 500 (SPY) is down about 7%, which is not far from normal market swings. At the same time, something more important is happening under the surface. Earnings estimates are moving higher.
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Explore NVDS for 2X short leverage on NVDAAccording to recent data, Wall Street has raised S&P 500 earnings forecasts by about 3.6% in just a few weeks. That marks one of the fastest upward revisions in years. This includes areas that usually struggle when oil prices rise.
Earnings Strength Is Broad-Based
The gains are not limited to energy names like Exxon Mobil (XOM) and Chevron (CVX), which benefit directly from higher oil prices. Instead, estimates have increased across the board. Even sectors such as airlines and chemicals, which face higher fuel costs, are seeing upward revisions.
Meanwhile, technology is leading the trend. Companies tied to AI demand, such as NVIDIA (NVDA), Advanced Micro Devices (AMD), and Microsoft (MSFT), are seeing strong earnings momentum. In fact, the tech sector posted its largest four-week increase in estimates since records began in 1995.
This matters because stock prices tend to follow earnings expectations over time. When estimates rise, it often supports valuations even during periods of uncertainty.
AI and a Strong Economy Are Key Drivers
There are two main forces behind this trend. First, the global economy entered the conflict in solid shape. Growth has slowed slightly, but there are a few signs of a recession. As Raphaël Thuin of Tikehau Capital told The Wall Street Journal, “We can absorb a shock and still have a decent year.”
Second, AI spending continues to drive demand. Companies are still investing heavily in data centers and chips, which support earnings across the tech sector. This trend is helping offset pressure from higher energy costs.
Of course, risks remain. A longer conflict or a sharper rise in oil prices could reverse these gains. However, for now, rising earnings estimates are giving the market a stronger base than headlines alone might suggest.
S&P 500 Heatmap
Recent market action shows strength across multiple sectors, which aligns with the broad rise in earnings estimates.
