Morgan Stanley analysts said Advanced Micro Devices and Costco Wholesale are among their highest-conviction ideas for the fourth-quarter earnings season. Of the 13% of S & P 500 companies that have reported results as of Jan. 23, 75% have reported a positive earnings surprise, according to data from FactSet. The same data indicates that 69% have posted revenue that exceeded consensus estimates. In a Friday note to clients, Morgan Stanley said it expects an above-average fourth-quarter earnings beat rate for the S & P 500. The bank highlighted a basket of stocks that could see meaningful upside after results are posted. Some names from this list are included below: Semiconductor stock Advanced Micro Devices will report its earnings next Tuesday after market close. Morgan Stanley’s $260 price target is slightly above the stock’s Friday close of $259.68. “We see AMD as the primary beneficiary of an increasingly tight environment for CPUs, especially in server, which will be the primary driver of near term EPS upside. And with core business earnings power improving quickly there could be room for more further multiple expansion on a renewed SOTP investment narrative,” wrote analyst Joseph Moore. Moore added that he expects very strong quarterly results thanks to a robust server microprocessor market. Simultaneously, Intel’s manufacturing limitations should further boost material share gains for Advanced Micro Devices. Shares of Advanced Micro Devices have surged 111% in the past year. Wholesale retailer Costco was another name on the list. The stock has added 5% over the past 12 months. Analyst Simeon Gutman’s $1,130 price target implies that shares could rally 15% from here. Gutman wrote that the stock has a favorable setup heading into the year, and expects sales and earnings to reaccelerate and outperform consensus estimates. “COST stock has underperformed during CY’25 (with a total return of negative -5%), as its U.S. comps ex gas have decelerated from a +9.2% in January ’25 (driven mainly by traffic), to a +5.5% in October ’25 and +5.8% in November ’25 (supported mainly by ticket/mix),” he wrote. “We believe that once COST starts lapping the easier compares, starting in May, there should be a reacceleration in comps to its usual ~7% to ~8% level.” The analyst added that core trends in Costco’s general merchandise remain strong. The company will report earnings next Wednesday. Another name from Morgan Stanley’s basket was Southwest Airlines , which reports earnings on Wednesday. Shares have popped 30% over the last year. Analyst Ravi Shanker said investors will be watching the airline carrier’s Jan. 27 rollout of assigned seating. “On the earnings conference call (1/29), we expect management to provide additional commentary around assigned seating, and extra leg room and how they quantify these initiatives. The stock performed remarkably well in 2025 given all the noise around the story and low expectations which means good execution could restore LUV’s position in the ‘Quality-3’ of the group,” Shanker wrote. Morgan Stanley’s $50 price target is about 19% above where shares closed on Friday.
