Morgan Stanley Wilson: Market sentiment is spreading, optimistic about quality stocks.

The expansion of earnings per share growth and the increase in upward adjustments to profit forecasts have led Morgan Stanley strategists to be optimistic about both high-quality stocks and companies in the artificial intelligence sector. Led by Michael Wilson, the research team stated, "The market is increasingly favoring targets with high-quality earnings, strong free cash flows, and operational efficiency improvements driven by artificial intelligence." The strategists pointed out that the median earnings growth rate of Russell 3000 constituents has reached 15%, the highest since 2021; revenue growth is at 8%, the best level since 2023. The team favors high-quality style factors and companies in the artificial intelligence sector, maintaining a high allocation to the large financial services sector while preferring hyperscale technology cloud providers over semiconductor stocks.