Editor in Chief of Constellation Insights
Constellation Research
About Larry Dignan:
Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning.
He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.
<br>Constellation Insights does the following:
Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and…
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Corporations and consumers are trying to navigate economic uncertainty and many are hitting the brakes amid tariffs, declining sentiment and volatility that's curbing long-term bets.
Those are some of the takeaways from a series of big financial earnings. These results are lead-ins to what tech giants will be talking about in the weeks ahead as they deliver first quarter results. See: After volatile first quarter, these 10 questions loom over enterprise technology, CxOs
Here's a look
A challenged economy
Morgan Stanley CEO Ted Pick said the current period of volatility, tariffs and whipsaw policies reflect the end of globalization and it's an adjustment.
"We've been talking for the last three years about the end of the end of history, which is to say the end of an extended period of political and economic alignment toward globalization. History now resumes," said Pick. "And with that comes an adjustment period where the outlook is necessarily less predictable. The stock, bond and currency markets are exhibiting the kind of overnight and intraday volatility that reflect rapidly changing probability assessments of different policy outcomes."
"The simple truth today is that we do not yet know where trade policy will settle nor do we know the actual transmission effects on the real economy," said Pick.
Blackrock CEO Laurence Fink said the market volatility can impact consumers as well as enterprises. "The market downturn impacts millions of ordinary people's retirement savings. Their investments for a child college education and tuition or steps they're taking to have more financial stability. We're in a period of geopolitical and economic activity, but we have seen this before. When there are big pivots in the world, big structural changes in the market, like the financial crisis, like, the European debt crisis or COVID or the surging inflation in 2022," said Fink.
Fink added that Blackrock's clients aren't capitulating, but they are raising cash. It's also possible that the US, which represents 75% of the world's capital markets, will become more like 50% as Europe invests in its economies."
Wells Fargo CEO Charles Scharf said: "Our current expectation that we will face continued volatility and uncertainty, and are prepared for a slower economic environment in 2025, but the actual outcome will be dependent on the results and timing of policy changes," he said.
The Bank of New York Mellon (BNY) CEO Robin Vince said the year started out with optimism about the economy in 2025, but quickly went south. "We have now seen a rapid and significant reversal of sentiment, driven by uncertainty about trade and fiscal policies, which added to existing tail risks, including a variety of geopolitical tensions and conflicts," said Vince. "I think you have to be a little bit pessimistic here about how the economy is going to evolve over the course of the next six to nine months."
Goldman Sachs CEO David Solomon said markets are likely to remain volatile:
"We are entering the second quarter with a markedly different operating environment than earlier this year. Our economists' expectation for growth in the US has fallen meaningfully from over 2% to 0.5%. The prospect of a recession has increased with growing indications that economic activity is slowing down around the world.
Our clients, including corporate CEOs and institutional investors are concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions. This uncertainty around the path forward and fears over the potentially escalating effects of the trade war have created material risks to the US and global economy."
Enterprise and consumer spending uncertain
JPMorgan Chase CFO Jeremy Barnam said it's unclear where consumer spending goes. "Thing to check is the spending data. The main thing that we see there is what would appear to be a certain amount of front-loading of spending ahead of people expecting price increases from tariffs," said Barnam.
On the corporate side, Barnam said clients have been reacting to tariff policy changes. "At the margin that shifts their focus away from more strategic priorities with obvious implications for the investment banking pipeline outlook towards more short-term work, optimizing supply chains and trying to figure out how they're going to respond to the current environment," he said.
Barnam added that smaller businesses are going to struggle, and the hit to large enterprises will depend on sector and how exposed they are to tariffs. "There's certainly a bit of wait-and-see attitude," said Barnam. "It's hard to make long-term decisions right now."
Morgan Stanley's Pick said something similar and companies are putting off strategic decisions until there's more clarity about the economy.
So long, earnings guidance
JPMorgan Chase CEO Jamie Dimon said companies will likely table earnings guidance due to the uncertainty. Dimon said:
"I don't usually pay that much attention to anecdotes, but this time I am. I think you're going to hear a thousand companies report and they're not going to tell you what their guidance is. My guess is, a lot will remove it," said Dimon. "They're going to tell you what they think the uncertainty might do to their customers, their base, their earnings, their costs, their tariffs. It's different for every company."
And earnings estimates will be cut. Dimon noted that analysts have reduced earnings growth estimates for the S&P 500 by 5% from 10% already. "My guess is that'll be 0% and negative 5% probably the next month," said Dimon.
M&A and IPOs may freeze
Dimon said M&A is going into wait-and-see mode and for mid-market companies deal will stop as companies adjust to the new reality.
Pick said there's a lot of nuance in the current M&A market. "Some clients are naturally going to pause, and others are a go. There are financial sponsors buying and selling as we speak, Honeywell, Warburg Pincus, buyer. Clearlake, Dun & Bradstreet. There are sponsors buying and selling assets," said Pick, who added that deals will still happen but occur amid uncertainty that needs to be priced in.
As for IPOs, there's a parade of companies that could go public but that may move out "a quarter or two," said Pick. However, these IPOs and M&A deals aren't being paused not deleted. Pick said once the markets are stable, deals will pick up.
"Stability will be more important than valuation. Most of these transactions are of comparative value. It's a question of what your longer-term priorities are with respect to things that matter to you in the C-suite around supply chain, energy, technology and sizing against the sector. With the IPO calendar there were folks that came right as that window briefly shut. The window ought to reopen and potentially reopen for periods of time that will allow for a lot of the new parade of companies to come through."
"In investment banking, the volatile backdrop led to more muted activity relative to the levels we had expected coming into the year," said Solomon.
Investments in AI will continue
Fink said Blackrock has expanded its AI infrastructure effort with xAI and Nvidia joining as partners. Fink said the fund has attracted "significant capital interest." "The partnership will meet the expected target of $30 billion in capital from investors, asset owners and corporations," said Fink. "And over time, we believe this can unlock over $100 billion in investment potential, including debt financing of these infrastructure projects."
Blackrock noted the volatility and uncertainty in the markets, but noted that " the mega forces like artificial intelligence, surging demand for global infrastructure and an ongoing evolution of debt financing presents transformative investment opportunities." Fink added: "Build outs of data centers and energy, the need for power grids in semiconductor plants and other infrastructure are beginning and are going to be growing dramatically over the coming years."
Even as the role of the US globally is re-evaluated the broad AI trend continues. "Eighty days ago, everyone talked about U.S. supremacy, the vitality of the United States. That is not a conversation that is happening now, but the macro forces of AI of infrastructure is just as strong today as it was 80 days ago," said Fink.
With Blackrock's Fink focusing on the macro picture for AI investment, Vince noted BNY is like many enterprises investing in the technology for efficiencies. BNY as deployed more than 40 AI tools into production, with many more in the building and testing phase and training complete for 80% of its workforce. The company also inked a deal with OpenAI to advance use cases.
"Collectively, we expect these to drive productivity gains, improved risk management and to provide meaningful leverage to our people in the future," said Vince. "We strongly believe that by empowering our people with AI to do what we do better every day, we will harness great benefits over the coming years."
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