There is such a thing as being too bullish.
Nearly 60% of S&P 500 (^GSPC) stocks now carry a Buy rating from Wall Street analysts, the highest level on record, according to Creative Planning chief market strategist Charlie Bilello
The percentage of Hold ratings has steadily declined this year, while the number of Sell ratings has stayed steady. Overall, Wall Street is expecting S&P 500 earnings per share (EPS) to grow 22% year over year for the second quarter. This is the highest estimate heading into earnings season since 2021. “When everyone is expecting good news, there’s less room for positive surprises.
That’s the setup entering Q2 earnings season,” Bilello warned. Companies have a lot on their plates, hinting that earnings estimates are a little too high and the outsized bullish ratings are a stretch. Investors must watch whether megacap tech giants such as Microsoft (MSFT) and Meta (META) can show tangible AI revenue to justify their multibillion-dollar infrastructure spending.