The world's largest money manager just got more bullish on American stocks - and the reason is tied to the war.
BlackRock raised its view on U.S. equities Monday, betting that the Iran conflict is closer to ending than markets are pricing in while also pointing to strong corporate profit growth that the selloff has obscured.
Annual corporate profits are running near $2.79 trillion with profit margins around 12%, and BlackRock's models suggest that even a small improvement in margins - around 4 points - could add roughly $878 billion in yearly profit, a 31% lift.
The firm stays overweight on U.S. stocks, with the AI theme broadening out beyond just chipmakers and Fed rate cuts supporting risk appetite. BlackRock manages more than $11 trillion in assets, making its positioning calls among the most closely watched on Wall Street.
The case rests on three pillars. Corporate earnings are still growing despite the war, the AI investment cycle is still early with trillions of dollars in planned spending, and valuations have come down from their late-2025 peaks after the war-driven selloff.
BlackRock's strategists said the pullback created buying opportunities in sectors that were punished by energy fears but have limited direct exposure to oil prices - specifically technology, healthcare, and consumer staples. They also noted that dividend-paying stocks look attractive after the selloff pushed yields on blue-chip names above 3% in some cases.
This is the bold part. BlackRock is calling the war closer to over than most investors think - even as peace talks just collapsed and the U.S. started a naval blockade of Hormuz over the weekend.
If they are right, the risk premium baked into oil and stocks comes out fast, and sectors like airlines, consumer discretionary, and industrials could rally hard as energy costs drop. If they are wrong, they are buying into a market that could face more pain from rising energy costs, higher inflation, and consumers pulling back on spending.
It is worth noting that BlackRock was one of the last major firms to downgrade stocks when the war started in February, and its timing has been criticized by some analysts who think the firm has been consistently too bullish on a resolution that has not materialized.
Other major firms have taken the opposite stance. JPMorgan cut its U.S. equity allocation in March, while Morgan Stanley moved to underweight on global stocks, citing the risk of a prolonged conflict pushing inflation higher and growth lower.
The split among the biggest names on Wall Street shows just how uncertain the outlook is right now.
BlackRock reports its own Q1 earnings on Tuesday. Investors will want to hear whether fund flows back up this bullish call - or if clients have been pulling money and moving to safety.
The gap between what BlackRock says publicly and what its clients actually do with their money will tell the real story about how the biggest investors in the world feel about the market right now.
Any mention of increased inflows into equity funds would validate the upgrade, while rising bond or money market allocations would suggest clients are ignoring the call.
