BlackRock returns to overweight U.S. stocks on AI-driven earnings upgrades

BlackRock is returning to overweight U.S. stocks, driven by rising earnings expectations in the technology sector — particularly semiconductors — that are reshaping equity valuations. The firm has upgraded U.S. equities from neutral to modest overweight, reallocating funds from front-end euro area government bonds, which had served as a cash-like holding during recent market stress. Earnings growth forecasts for U.S. tech now stand at 43% for 2026, up from 26% the prior year, even as broader markets contended with Middle East-driven volatility. At the core of this revision is the semiconductor industry, where LSEG data indicates an 80% projected earnings boost in 2026, fueled by global demand for AI infrastructure. The valuation premium for U.S. IT stocks has also narrowed, with the 12-month forward valuation over other sectors at its lowest level since mid-2020, making the sector more attractively priced. The move signals a broader return to risk-taking after BlackRock had previously pulled back due to geopolitical tensions. While U.S.-Iran negotiations have collapsed, the mere fact that talks occurred suggests strong economic incentives to contain the conflict — a factor supporting market stability. AI’s ripple effects extend beyond U.S. borders, lifting emerging market equities, especially in South Korea and Taiwan, where semiconductor manufacturers are key beneficiaries. BlackRock sees this trend as durable, underpinning both its U.S. and EM equity preferences as part of a tactical shift back toward growth-sensitive assets.