HSBC Says AI-Driven Earnings Could Lift Stocks Further

Key Moments

HSBC keeps overweight positions in Technology and Communications. The bank cites AI spending and productivity gains as major earnings drivers.
Moreover, HSBC expects earnings growth of 56% for US tech and 25% for the S&P 500 this year. It also says current valuations still support further equity gains.
In addition, HSBC sees Materials, Financials, Industrials, and Utilities as key AI beneficiaries due to data center growth and electricity network investment.

AI-Driven Earnings Momentum Supports Equities

HSBC’s Willem Sels says strong earnings growth continues to support global equity markets. In particular, US Technology and Communications remain at the center of this trend. According to Sels, these sectors benefit from two major AI drivers: higher capital spending and rising productivity.

As a result, HSBC maintains an overweight stance on Technology and Communications. However, the bank also favors Materials, Financials, Industrials, and Utilities as additional AI winners. Furthermore, HSBC does not see current valuations as a barrier to more market upside.

Earnings Expectations and Valuation View

Sels says earnings trends continue to improve across the US market. Once again, Technology and Communications lead the gains. Analysts now expect earnings growth of 56% in US tech this year and 25% for the S&P 500 overall.

According to HSBC, AI spending and productivity improvements continue to support these forecasts. Meanwhile, the bank believes valuations remain reasonable despite recent market gains. Sels also notes that technology valuations look more balanced after the sell-off earlier in 2026.

Segment / Index	Expected Earnings Growth	Commentary
US Technology	56% this year	Driven by AI capex and productivity gains
S&P 500	25% this year	Supported by broader AI productivity trends

AI Expands Beyond Technology

Sels says AI is transforming how companies operate and compete. Therefore, HSBC views AI as a long-term investment theme that reaches far beyond the Technology sector.

At the same time, policy support continues to strengthen the outlook. For example, HSBC points to US tax incentives and improving regulatory conditions in China’s internet sector. Consequently, the bank sees opportunities in semiconductors, data centers, and companies adopting AI tools across industries.

Sector Preferences Beyond Core Tech

HSBC expects AI opportunities to spread into sectors linked to physical infrastructure and financing. For example, Industrials and Materials should benefit from data center construction and equipment demand.

Likewise, Utilities may gain from expanding electricity networks needed to support AI infrastructure. Meanwhile, Financials could benefit from stronger capital market activity tied to AI investment and corporate expansion.

As Sels explained: “AI continues to transform how businesses operate and compete, making it a long-term investment theme that’s not to be missed.”

HSBC’s Preferred Equity Exposure

HSBC says it favors Materials and Financials across regions. In addition, the bank prefers Industrials and Utilities in global, US, and European markets because of their exposure to AI-related growth trends.

Overall, HSBC combines overweight exposure to Technology and Communications with targeted positions in sectors expected to benefit from AI spending, infrastructure expansion, and productivity gains.