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Goldman Sachs said stronger corporate earnings and improving profit expectations are continuing to push the S&P 500 toward fresh record highs, with the benchmark index up 8% year-to-date through Monday.

Companies in the index delivered first-quarter earnings-per-share growth of 17% year-over-year, excluding certain non-recurring items.

At the same time, forward 12-month EPS forecasts have climbed 13%, while valuation multiples have eased modestly, with the market’s price-to-earnings ratio down 4%.

Investment Spending Outpaces Buybacks

The bank pointed to a notable shift in how corporations are deploying capital.

Capital expenditures among S&P 500 companies jumped 38% from a year earlier during the first quarter, far exceeding the 1% growth recorded in share repurchases.

Goldman expects the gap to widen further into 2026, projecting capex to rise 33% to around $2 trillion, compared with a 3% increase in buybacks to roughly $1 trillion.

AI Companies Continue Driving Spending Boom

Major AI infrastructure companies remain at the center of the spending surge.

Goldman forecasts AI hyperscalers will collectively spend approximately $755 billion in 2026 as demand for artificial intelligence infrastructure continues to expand.

The broader increase in investment activity is also spreading across multiple sectors beyond technology.

Market Rewards Companies Focused on Expansion

According to Goldman, investors have increasingly favored companies investing aggressively in future growth opportunities over firms primarily emphasizing shareholder cash returns.

This preference has been especially strong among AI-linked businesses.

The bank also noted that uncertainty tied to the ongoing conflict and shifting Federal Reserve expectations has helped revive investor appetite for higher-quality companies after much of 2025 saw rotation away from the segment.

Strong Balance Sheets Still Viewed Favorably

Goldman Sachs said companies positioned to benefit from long-term structural growth trends are likely to continue attracting investor support, although geopolitical developments and AI market dynamics could affect how current investments are valued.

The bank added that companies with strong balance sheets and consistent shareholder return strategies should continue to command premium valuations.

Limited buyback growth could also increase the scarcity value of companies actively returning capital to investors, while elevated borrowing costs may further reward financially stronger businesses.

HSBC has revised higher its silver price outlook for 2026 and 2027, though the bank continues to believe the metal’s upside potential could remain constrained over the longer term.

The bank now forecasts average silver prices of $75 per troy ounce in 2026 and $68 per ounce in 2027, compared with earlier projections of $68.25 and $57.

Record Rally Driven by Safe-Haven Buying

Silver climbed to an all-time nominal high of $121 per ounce in late January as investors piled into safe-haven assets amid geopolitical tensions, tariff concerns and surging gold prices. Tight market conditions also contributed to the rally.

Prices later dropped sharply to around $64 per ounce in early February after a stronger U.S. dollar and weaker gold prices pressured the market, although silver later rebounded to above $86 per ounce.

HSBC Expects Market Deficits to Shrink

Despite raising its forecasts, HSBC said narrowing supply shortages and weaker end-market demand should limit the possibility of prolonged price spikes.

The bank estimates that the global silver deficit will decline from 143 million ounces in 2025 to 73 million ounces in 2026, before narrowing further to 25 million ounces in 2027 as mining activity and recycling volumes increase.

“Moderating deficits, in our view, will not be sufficient to propel silver sharply higher for prolonged periods,” said James Steel, HSBC’s chief precious metals analyst.

Industrial Demand Seen Softening Further

Industrial usage, which represents the largest component of silver demand, fell to 657 million ounces in 2025 from a record 679 million ounces a year earlier.

HSBC said manufacturers are increasingly attempting to reduce silver usage or switch to alternative materials because of elevated prices, a trend the bank expects to continue in the coming years.

The bank projects industrial demand will ease to 642 million ounces in 2026 and 618 million ounces in 2027, while jewellery demand is expected to decline to 157 million ounces from 189 million ounces.

Supply Growth May Help Stabilize the Market

HSBC expects mine production to remain relatively stable at 848 million ounces in 2026 before increasing to 868 million ounces in 2027.

Recycled silver supply is also projected to rise, reaching 216 million ounces this year compared with 197 million ounces in 2025.

Dollar Outlook and Geopolitical Risks Could Still Support Prices

According to James Steel, expectations for a softer dollar and ongoing geopolitical uncertainty may continue to provide some support for silver prices.

Still, he warned that “the gold:silver ratio is likely to widen, allowing silver to ease even if gold rallies.”

HSBC’s year-end silver targets stand at $70 per ounce for 2026 and $65 per ounce for 2027.

Federal Reserve may soon have to abandon its dovish stance and potentially shift toward tighter monetary policy as inflation remains persistent and the U.S. labor market continues to hold firm, according to Yardeni Research.

The research firm said prospects for interest rate cuts in 2026 are now “essentially off the table,” citing renewed inflation pressures, inflation staying above the Fed’s 2% target for five consecutive years, rising costs linked to the expansion of AI infrastructure, and continued labor market stability.

Investors Eye June Fed Meeting for Policy Shift

Yardeni Research said financial markets increasingly view the Federal Open Market Committee meeting on June 16-17 as the likely moment when policymakers officially remove their easing bias.

The firm pointed out that the two-year Treasury yield has already climbed above the effective federal funds rate, which it said may indicate current policy settings are no longer restrictive enough to slow inflation.

Producer Price Data Strengthens Hawkish Outlook

The shift in expectations was reinforced by April’s producer price index report, according to Yardeni.

Final demand producer prices rose 1.4% from the previous month and 6.0% from a year earlier, representing the fastest annual increase since December 2022 and coming in well above market expectations.

Inflationary pressures in transportation intensified as truck freight costs jumped 8.1% month over month, the sharpest increase since 2009, while service-sector prices recorded their largest monthly gain in four years.

Firm Still Expects Limited Fed Moves This Year

Despite adopting a more hawkish tone, Yardeni Research said it still expects a “none-and-done” scenario for the remainder of the year, implying the Fed could hold rates steady without further policy action.

The firm said moderating wage growth, productivity gains helping contain labor expenses, and stable long-term inflation expectations could help offset inflation risks.

Treasury Yields Seen Climbing Further

Nevertheless, Yardeni warned that the possibility of a future rate increase is continuing to rise.

The firm also forecast that the yield on the 10-year U.S. Treasury note could move toward 4.60% in the near term.

HSBC strategist Max Kettner remains firmly bullish on global risk assets, arguing that investors are premature in calling for a “buy the rumor, sell the fact” reaction to easing Middle East tensions.

Kettner said HSBC’s sentiment and positioning models continue to support equities and are “not sending a sell signal yet.”

“Most notably, we think systematic strategies have some further room to buy. So any potential further supportive news flow from the Middle East may well lift risk assets and lead to a more broad-based equity rally again,” he wrote.

He added that systematic investors still appear under-positioned, limiting the market impact of potential negative headlines.

HSBC therefore continues to maintain its strongest overweight allocation to global equities, particularly in U.S. and Asian markets, alongside sizable overweight exposure to emerging-market local debt and high-yield credit.

Meanwhile, the bank remains most underweight U.S. Treasuries relative to European sovereign debt.

Kettner pointed to robust corporate earnings as a major driver behind the bullish stance. Excluding technology companies, S&P 500 first-quarter net income rose 11% sequentially, while earnings surprises reached their strongest level since the post-pandemic reopening period.

Notably, U.S. technology companies avoided any below-consensus EPS results during the quarter.

HSBC also highlighted that consensus forecasts for 2026 S&P 500 earnings continue moving higher rather than following the normal pattern of downward revisions.

The bank added that U.S. consumption trends still suggest economic momentum is improving, supported by healthy household balance sheets, strong employment conditions and tax refund flows.

While some softening has appeared in credit card spending data, HSBC believes much of it reflects distorted comparisons caused by tariff-related spending pull-forwards last year.

In contrast, Europe’s outlook appears weaker, with business confidence indicators such as Germany’s ifo survey signaling softer activity.

As a result, HSBC continues favoring European bonds over U.S. Treasuries, prefers U.S. consumer discretionary equities over European peers, and remains constructive on European financial stocks.

Wolfe Research has cautioned that central banks around the world may risk making policy mistakes if they react too aggressively to the recent surge in oil prices caused by the Iran conflict.

The firm noted that while U.S. equity markets have remained relatively resilient, long-term bond yields and interest-rate expectations in futures markets have closely tracked the move higher in oil prices since tensions escalated in the Middle East.

Europe and Asia Face Greater Economic Pressure

According to Wolfe Research, the muted response in U.S. stocks partly reflects America’s stronger energy independence compared with Europe and Asia, both of which remain heavily dependent on imported fuel.

The report said rising energy costs are expected to weigh more heavily on economic growth outside the United States, particularly in regions where imported oil and gas play a larger role in the economy.

Global Rate Policy May Drift Away From the Fed

The research group pointed out that several major central banks have recently held policy meetings, increasing the likelihood that monetary policy paths outside the U.S. could begin to diverge from those of the Federal Reserve.

Wolfe suggested that some overseas central banks may move toward tighter policy even if the Fed keeps rates steady or eventually cuts them.

Bank of Japan Decision Highlights Internal Tensions

The latest meeting of the Bank of Japan drew particular attention after policymakers voted 6-3 in favor of leaving interest rates unchanged.

Wolfe Research said this represented the widest division among policymakers since Governor Kazuo Ueda took office in 2023, suggesting that pressure for additional tightening may be building inside the central bank.

Stronger Yen Could Spark Market Disruption

The firm warned that if the Bank of Japan raises rates more aggressively than markets currently expect — futures markets are pricing in roughly two additional hikes — the resulting strength in the yen versus the dollar could trigger another unwinding of carry trades and increase volatility across global financial markets.

Two Key Risks Could Threaten the Market Rally

Wolfe Research identified two major threats to the ongoing market advance: central banks tightening policy in response to what may ultimately prove to be temporary energy-driven inflation, and the risk of a disorderly carry trade unwind linked to sharp currency movements.

Artificial intelligence-related shares have been responsible for more than 80% of the S&P 500’s gains in 2026, raising concerns among some investors about whether the rally has become too concentrated. Strategists at Jefferies, however, argue that the strength of the move remains supported by fundamentals rather than excessive speculation.

The firm’s quantitative strategy team said returns across its AI stock basket continue to be driven largely by earnings growth instead of expanding valuation multiples, which they believe makes the trend “sustainable.” Without AI-linked companies, the S&P 500 would have gained only around 2% so far this year.

Strong Earnings Momentum Continues Across AI Sector

Jefferies noted that forward earnings forecasts for its AI basket in 2026 have risen by more than 30% since the middle of 2025. Analyst consensus currently points to a compound annual earnings-per-share growth rate of 38.5% for 2026 through 2027, far above the 11.9% projected for sectors outside artificial intelligence.

Even with that growth profile, the AI basket trades at roughly 25 times forward earnings, below its historical one-standard-deviation level. Its PEG ratio also stands at just 0.6 times.

“AI is the cheapest sector to own in the U.S.,” on a PEG basis, the team led by Desh Peramunetilleke wrote.

Not All AI Segments Are Performing Equally

Performance across the AI landscape has varied considerably this year, according to Jefferies. Stocks tied to AI servers, optical technologies and memory products have generated the strongest returns, while hyperscalers and semiconductor designers have lagged behind other AI-related groups.

The analysts said memory and compute-focused companies currently appear the most attractive from a valuation standpoint based on PEG ratios. Meanwhile, semiconductor equipment makers and chip design companies are viewed as comparatively expensive.

Earnings Season Offers Additional Confidence

Jefferies said the latest earnings season further reinforced the positive case for AI-related equities. Approximately 86% of companies exceeded profit expectations, marking the highest earnings beat rate seen since the post-pandemic period and improving from 75% in the previous quarter. Revenue surprises also strengthened, with 82% of companies beating forecasts.

Despite those strong numbers, the firm noted that positive earnings surprises did not consistently translate into outperformance across the broader market. Outside AI and a limited number of sectors, companies generally saw muted share-price reactions following earnings beats, while firms missing expectations faced sharp declines, reflecting elevated market expectations.

“On a more positive note, beats were followed by upgrades, suggesting earnings risks are low despite the geopolitical uncertainty,” the strategists added.

Geopolitical Risks Remain a Key Concern

Analysis conducted through the AlphaSense platform covering roughly 330 earnings calls showed that management teams remain broadly optimistic, with positive sentiment reaching 95%. Analyst sentiment also improved, with 58% of earnings calls reflecting a positive tone compared with 48% in the fourth quarter of 2025.

At the same time, companies increasingly pointed to geopolitical tensions involving the United States and Iran as a growing risk factor. Around 44% of businesses referenced the conflict negatively, highlighting concerns around supply chain disruption and softer consumer demand.

Broader Market Growth Remains Subdued Outside AI

Jefferies also highlighted the growing divide between AI-driven sectors and the rest of the market. Aggregate earnings revisions for the S&P 500 over the past three months total roughly 6%, but fall to just 0.3% once AI and commodity-related sectors are removed from the calculation.

Sulnox Group PLC (AQSE:SNOX) announced a distribution agreement with Performance Products & Services (PPS), a supplier to industrial sectors operating across Southern India and Sri Lanka. The agreement extends Sulnox’s reach into two high-volume fuel markets, giving the company greater access to industries facing rising fuel costs and increased emissions scrutiny.

Ben Richardson, CEO, commented: “The addition of PPS greatly strengthens our position across the Indian market. Our latest partner brings more than two decades of industrial distribution experience, strong relationships with major manufacturing and industrial customers, and a growing export capability that extends our reach into Sri Lanka and beyond.” Read more

Delta Gold Technologies plc (AQSE:DGQ) featured in the launch episode of ‘The Innovation Report’ hosted by The Market Link, a new documentary series exploring breakthroughs shaping emerging industries. Read more

The Company also announced the appointment of Dr Thomas P Davis as a Strategic Advisor and the inaugural member of the company’s newly formed Strategic Advisory Panel. Read more

Mendell Helium plc (AQSE:MDH) signed two additional land leases in Fort Dodge, Kansas, both considered prospective for helium production. The Durler and Leffert leases are located near M3 Helium’s existing land holdings.

Nick Tulloch, CEO, said: “Since raising £5 million in an institution-led fundraise, we have moved quickly to put preparations in place for our forthcoming expansion of Fort Dodge. The Durler and Leffert leases are strategically located near M3 Helium’s existing land holdings which, in time, may enable M3 Helium to achieve some cost savings in its development plans by combining production facilities and access to disposal wells.” Read more

Falconedge Plc (AQSE:EDGE) reported a monthly Bitcoin yield of 1.078% for April and incremental Bitcoin growth of 0.2187 BTC, with compounded yield since the strategy’s inception in December 2025 standing at 6.34%. Read more

Supersearch Plus plc (AQSE:SSP) has launched drone delivery services in Hong Kong for its range of freeze-dried seafood products. The new service reduces average delivery times from 90 minutes to ten minutes, offering a faster, more reliable, and sustainable alternative to traditional road-based transportation. Read more

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