JPMorgan is advising investors to use Iran-related market weakness as a buying opportunity.
The bank’s strategists believe strong corporate earnings can continue supporting equities through the second half of 2026, even as geopolitical risks remain elevated.
JPMorgan Maintains a Bullish Market View
JPMorgan’s positive outlook for 2026 has been largely driven by expectations of strong earnings growth.
Strategists led by Mislav Matejka said many investors entered the year believing consensus forecasts were too optimistic.
However, earnings-per-share estimates have continued to rise instead of falling.
Earnings Forecasts Keep Improving
Despite renewed uncertainty surrounding the Iran conflict, corporate earnings projections for 2026 have moved higher.
JPMorgan noted that the improvement is visible across several regions and sectors.
The upward revisions are not limited to technology and energy companies, which suggests broader strength across the market.
Iran-Driven Selloffs Seen as Buying Opportunities
JPMorgan believes investors should continue adding exposure during market declines caused by the Iran conflict.
The bank has maintained this view since the second half of March.
Its strategists argue that geopolitical shocks are increasingly treated as temporary because both sides often have strong incentives to prevent a prolonged escalation.
Q2 Earnings Growth Expectations Remain Strong
Consensus forecasts currently point to second-quarter earnings growth of around 22% year-on-year in the United States.
Eurozone earnings are expected to rise by approximately 12%.
These figures may appear ambitious. However, JPMorgan noted that analysts have continued raising estimates ahead of the reporting season.
This differs from the usual pattern, where forecasts are often reduced before companies release their results.
Median Earnings Forecasts Look More Achievable
JPMorgan said median earnings growth offers a more realistic picture of the market.
On this measure, earnings are expected to increase by around 8% in both the United States and the eurozone.
The bank considers these projections achievable.
This supports the view that corporate profits can remain resilient despite geopolitical and economic uncertainty.
Economic Data Supports Further Earnings Growth
JPMorgan also highlighted several improving economic indicators.
The OECD leading indicator has strengthened, while eurozone economic surprises have moved into positive territory.
Credit growth in the eurozone has also improved.
At the same time, U.S. jobless claims have remained relatively stable.
Together, these developments could support further earnings growth, particularly among cyclical companies.
Eurozone Earnings Outlook Improves
Earnings revisions in the eurozone have turned positive.
The gap between U.S. and European earnings expectations is also narrowing and may close for the first time since early 2025.
JPMorgan expects eurozone companies to deliver strong double-digit earnings-per-share growth in 2026.
That would mark a significant improvement after several years of weak profit growth.
However, the outlook depends partly on whether the Iran conflict avoids another major escalation during the second half of the year.
Banks and Semiconductor Stocks Could Perform Well
At the sector level, JPMorgan expects banks to report reassuring results.
The firm also believes semiconductor stocks may be positioned for a recovery.
Earnings revisions in the chip sector have continued to improve, even as share prices have recently weakened.
This divergence could create attractive opportunities for investors.
Energy Stocks Offer Less Valuation Protection
JPMorgan is more cautious about the energy sector.
The bank said energy stocks no longer offer the same valuation cushion against fluctuations in oil prices.
This means the sector may be more vulnerable if crude prices become volatile or retreat from recent highs.
Market Leadership Is Broadening
JPMorgan also sees signs that market gains are spreading beyond mega-cap companies.
A broader range of stocks and sectors is beginning to contribute to market performance.
The bank expects this trend to continue.
Although further volatility is likely, JPMorgan does not expect temporary market declines to develop into a prolonged selloff.
Strong Earnings Remain the Key Support
JPMorgan’s overall view remains constructive.
The bank believes improving earnings forecasts, resilient economic data and broader market participation can support equities despite the risks created by the Iran conflict.
For that reason, its strategists continue to view geopolitical pullbacks as opportunities to add exposure rather than reasons to exit the market.
