As the first quarter earnings season kicks off, investors are eagerly awaiting the results from big banks. According to Goldman’s economist, real US GDP growth is expected to be around 3% in the first quarter of 2026, which is historically consistent with double-digit EPS growth. This means that the consensus high bar of 12% YoY EPS growth may be cleared, marking the sixth consecutive quarter of double-digit growth, the longest streak since the GFC.

However, Goldman’s team notes that this is a macro-over micro tape, and therefore they expect a smaller than usual price reaction to results. This dynamic is similar to what was seen in Q1 ’25 during the tariff shock.

If the results are strong without any further escalations, investors may redeploy money into high conviction longs. Alternatively, if companies talk up adoption of AI beneficiaries, the market may become more focused on AI winners such as Momo longs, AI winners, Memory, Semis, and others. Goldman’s positioning data suggests that this group is the cleanest it’s been this year, with net positions in the 50th percentile and gross positions in the 22nd percentile over the past three years. Any sign of AI ROI evidence could really get this group moving.

Goldman highlights AI investment spend as the engine for growth, accounting for 40% of the S&P 500 EPS growth this year. Info tech is expected to grow EPS by 44%, which is 87% of EPS growth in Q1. Moreover, tailwinds have only moved higher in recent weeks, especially post-MU guiding next-quarter EPS 60% above consensus.

However, there are also headwinds to consider, such as rising oil prices, which could impact the sector.