TLDR
- Barclays maintains a constructive view on US stocks despite underperformance versus Europe and Asia-Pacific year to date
- US equity funds have pulled in over $100 billion in inflows; emerging markets have seen $40 billion in outflows
- S&P 500 EPS growth revisions are running 9.4% above trend, far ahead of the usual 1.1% cut at this point in the year
- Barclays sets a base-case year-end S&P 500 target of 7,650, with a bull case of 8,200
- In semiconductors, Seagate, Skyworks, and Qorvo were upgraded; Qualcomm was reinstated at Underweight
US stocks have underperformed Europe and Asia-Pacific markets so far in 2026. Technology and Financials have been the main drag on returns.
Despite that, Barclays strategists say their positive view on American equities has not changed.
The team, led by Venu Krishna, says the US is better placed than global peers to handle the energy shock tied to the Iran conflict and disruption in the Strait of Hormuz. Europe and Asia-Pacific are seen as more exposed to that risk.
IRAN THREATENS MILITARY RESPONSE TO U.S. BLOCKADE
Iran says the U.S. naval blockade is equivalent to an act of war and must be met with force.
Senior officials dismissed Trump’s ceasefire extension and signaled escalation, warning any action against Iranian vessels would…
— *Walter Bloomberg (@DeItaone) April 22, 2026
Within the US market, Energy, Materials, and Industrials have performed well this year, lifted by higher commodity prices. Healthcare and Financials have held back overall returns.
Small caps have outperformed large caps, with the small-cap index up 10% on the year.
Fund flow data backs up the case for US assets. Equity funds have taken in more than $100 billion in inflows year to date. Emerging market equity funds have seen nearly $40 billion in outflows over the same period.
Earnings Outlook Supports the US Case
S&P 500 earnings per share growth is expected to outpace sales growth in coming quarters, which points to improving operating leverage.
Full-year 2026 EPS revisions are running about 9.4% above trend. At this point in the year, estimates are usually cut by around 1.1%.
Barclays notes that US margin expansion, driven largely by Tech, has outpaced the rest of the world. Strip out Tech, and S&P earnings growth is roughly in line with Europe but below Asia-Pacific.
On valuation, US equities are around the 70th percentile of their 10-year history. That is broadly in line with Asia-Pacific and below Europe. Big Tech sits near the 14th percentile of its own history, making it look cheap relative to where it has traded.
Barclays has set a base-case year-end S&P 500 target of 7,650, implying about 7% upside. The bull case is 8,200 and the bear case is 5,900.
Barclays Reshuffles Semiconductor Ratings
Ahead of first-quarter earnings, Barclays also made several changes to its semiconductor coverage.
Seagate Technology was upgraded to Overweight. The firm raised its hard disk drive market forecast and pointed to Seagate’s move to 40TB drives. Drive pricing could rise as much as 15% year-over-year by 2027.
Western Digital’s price target was raised to $405.
Skyworks Solutions and Qorvo were both upgraded to Overweight. Barclays sees foldable iPhones and the iPhone 20 anniversary cycle as upcoming catalysts for both radio frequency chipmakers.
Qualcomm was reinstated at Underweight. The firm cited a tough handset market and said AI at the edge is still several years from driving meaningful revenue.
Penguin Solutions was downgraded to Equal Weight, with margin compression expected to continue through 2027.
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