U.S. companies are increasingly pointing to policy shifts, tariff mitigation strategies and artificial intelligence adoption as key themes shaping their outlooks, according to Morgan Stanley.
The bank noted that “discussions of ‘order books’ and ‘raise guidance’ rose to recent highs this quarter as companies readjust their guidance post Liberation Day.”
It added that earnings per share estimates have been revised higher for the Communication Services, Financials, Consumer Discretionary and Technology sectors for both 2025 and 2026.
Morgan Stanley highlighted early benefits from the One Big Beautiful Bill Act (OBBBA), saying “R&D expensing and bonus depreciation are providing an FCF boost.”
The impact, it noted, is more visible in free cash flow than earnings per share, with companies guiding for benefits starting in the third quarter of 2025, particularly in Industrials, Communication Services and Technology.
“We think the OBBBA has meaningful benefits that are underappreciated due to their FCF versus EPS impact,” the analysts wrote.
On tariffs, Morgan Stanley said “corporate America is adapting on multiple fronts (pricing, supply chain, and cost control) to cushion the impact of higher import tariffs.”
Companies have cited strategies such as pricing power, foreign exchange hedging, stockpiling inventory and diversifying supply chains.
Some effects, such as price increases and cost-of-goods impacts, may not be clear until the third and fourth quarters.
AI remains a dominant theme, with mentions “near all-time highs but ticked slightly lower from last quarter’s all-time high.”
Morgan Stanley said companies are shifting from broad promises to more concrete updates, with adoption “still in the early stages of productivity gains.”
It estimates that about $920 billion in AI adoption benefits could translate into $13–16 trillion in long-term market value for the S&P 500.
