So here’s the thing about earnings season – it’s like getting your report card, except instead of disappointing your parents, you’re disappointing shareholders. But this quarter? The kids are actually doing alright.
Morgan Stanley’s Michael Wilson – who’s basically the cool teacher who actually knows what’s going on – just dropped some analysis that has everyone feeling pretty good about where stocks are headed in 2026. And honestly, the numbers are kind of impressive.
The Two Stats That Matter
Wilson’s team is geeking out over two specific things: companies are beating their sales expectations by roughly double the usual rate, and earnings per share growth hit 11% for the median stock. That’s the best we’ve seen in four years, which in Wall Street time is basically ancient history.
Now, 2.3% sales growth might sound like your savings account interest rate (sorry), but it’s actually twice what Wall Street typically expects. This means companies aren’t just squeezing more profit out of the same old stuff – they’re actually selling more things to more people. Revolutionary concept, right?
The earnings per share story is even better. We went from 6% growth last quarter to 11% this quarter. That’s not just Big Tech flexing their AI muscles – this is happening across the board, from your boring industrial companies to whatever it is that Sherwin-Williams does (paint, apparently, and lots of it).
The “Rolling Recovery” Theory
Wilson calls this a “rolling recovery,” which sounds like something you’d order at a sushi restaurant but actually means different sectors are taking turns getting their act together. While everyone’s been obsessing over whether ChatGPT will steal our jobs, regular companies have been quietly figuring out how to make money again.
“Stocks have figured this out ahead of the consensus forecaster,” Wilson notes, which is finance-speak for “the market is smarter than the experts, as usual.” Classic.
The Bigger Picture
Beyond the numbers, Wilson thinks we’re looking at the start of a new bull market cycle that began back in April. The trade tensions with China have cooled off (for now), which removes one major headache from the equation.
The only wild card? The Federal Reserve and their ongoing “will they or won’t they” interest rate drama. Jerome Powell’s recent comments left everyone guessing about what comes next, but Wilson thinks the administration’s desire to “run it hot” economically will keep monetary policy pretty friendly.
What This Actually Means
Look, earnings season can be a slog of corporate jargon and carefully worded guidance. But when you strip away all the noise, this quarter told a pretty straightforward story: companies are selling more stuff and making more money doing it. That’s not rocket science – it’s just good business.
And if Wilson’s right about this rolling recovery continuing into 2026, we might be looking at a market where success isn’t just concentrated in a handful of tech giants. Sometimes the best investment strategy is just betting on companies that know how to count money. Who knew?