Morgan Stanley likes these stocks heading into second-quarter earnings

Morgan Stanley highlights 28 S&P 500 companies poised for earnings “positive profit surprises,” led by GE Vernova (up 64% YTD), United Airlines (up 24% in 3 months), and Lam Research (shares +102% in 2026). GE Vernova could rise if it lifts guidance tied to new gas turbine contracts, with the industrial capex backdrop broadening beyond data centers. United Airlines may gain on a stronger full-year outlook as booking intent remains healthy (seven consecutive fare increases absorbed) and oil prices move lower. Lam Research could rally if it issues a strong near-term revenue outlook amid robust AI-driven equipment orders.

Analysis

GEV is the cleanest “show me the backlog” story in the group: the multiple can keep expanding only if management convinces the market that today’s AI-driven demand is becoming a multi-year pricing cycle, not just a one-off order burst. The second-order winner is the broader power-infrastructure complex—grid equipment, switchgear, and electrical balance-of-system names—because a strong print would validate that utility capex is moving from planning to spend. The risk is execution: if backlog converts slowly or working capital balloons, the stock can de-rate even on good headlines.

LRCX is more interesting as a cycle confirmation trade than a pure earnings beat. If guidance shows orders broadening beyond the top AI names, it should lift the entire semi-capex basket, but the stock’s big run means the market is paying for acceleration, not merely stability. The contrarian setup is that consensus may be underestimating how quickly memory and foundry customers re-open budgets once utilization tightens; if that happens, SOXX and ASML likely catch a sympathy bid, but AMAT may actually lag if etch/deposition mix is less favorable than expected.

For UAL, the key mechanism is not fuel alone; it is whether airlines can keep pricing power while capacity discipline holds. If management confirms resilient forward bookings, the upside should spill into DAL first and the more premium-heavy carriers, while weaker fare competitors remain stuck with less margin leverage. The main falsifier is a macro crack in business travel or a sharp oil reversal; that would hit the whole carrier group within days, while the upside case plays out over 1-3 months if guidance resets higher.

Key Decisions for Investors

• Long GEV into 7/22 earnings; best expression is a defined-risk Aug call spread. Upside is a re-rate on backlog/pricing confirmation; invalidation is any guide that implies turbines are merely booked, not monetizing.
• Pair trade: long LRCX / short SOXX into 7/29. The point is to isolate idiosyncratic guidance upside while hedging beta; exit if LRCX only repeats "stable" capex commentary or order growth fails to re-accelerate.
• Long UAL versus short JETS or AAL into Wednesday’s print. This targets pricing-power dispersion rather than fuel beta; thesis breaks if forward booking metrics soften or if management turns cautious on Q3 yields.
• Watchlist alert: if GEV, LRCX, and UAL all report strong guidance but the stocks fail to hold post-earnings gains, that would signal the market is already fully positioned and the better trade becomes selling strength after the initial gap.