In our second-quarter Equity Outlook, we demonstrate why we believe global growth and equity markets will remain resilient. We also discuss key risks to our thesis, including the potential impacts from a protracted oil shock and further pressure on consumer discretionary spending. While our base case implies that the conflict in Iran will de-escalate within a few weeks, we believe a prolonged conflict could meaningfully increase near-term equity risk.
Key portfolio considerations, in our view, include:
- Regions: Remain overweight Japan and EM; upgrade U.S. to overweight; downgrade Europe to underweight
- U.S. sectors: Maintain overweight Energy and Technology (a cyclical/growth barbell)
- U.S. sizes and styles: Equal weight large caps vs. small caps, and value vs. growth
The Quick Case for Large Caps and the Mag 7
While we remain constructive on small caps, we believe the macro backdrop now slightly favors high-quality large caps, especially amidst rising geopolitical risk and uncertainty.
Consider that the forward P/E on the S&P 500 Index has fallen 10% from its October 2025 peak. Meanwhile, large-cap earnings growth appears well intact: Since the start of the conflict in Iran, forward earnings estimates among large caps have risen by 5%, with technology firms accounting for two-thirds of that increase.
This trend suggests to us that, despite simmering macro uncertainty, the risk-reward outlook for large caps appears compelling. The Mag 7 in particular now trade at 26x forward earnings. Relative to the S&P 493, that’s a level near the troughs of the late-2022 sell-off and Liberation Day (see Figure 1), all while earnings growth for the group has remained resilient. This setup could provide an attractive entry point, in our view.
Figure 1: Relative to the S&P 493, the Mag 7 now trade near the troughs of the late-2022 sell-off and Liberation Day
Source: Neuberger Berman Research and FactSet. Data as of April 15, 2026. Past performance is not indicative of future results. For illustrative purposes only. Nothing herein constitutes a prediction or projection of future events, future markets behavior, investment advice or a recommendation to buy, sell or hold a security. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed
For a deeper dive into the data, please download our full report.