J.P. Morgan raised its year-end target
for the S&P 500 index to 8,000 from 7,800 on Monday,
citing prospects of solid corporate earnings and rising
confidence that AI investments by large hyperscalers would drive
faster revenue growth.
The new target implies about 3.1% upside from the index’s
last close of 7,757.64 and adds to a growing wave of bullish
calls, with at least seven brokerages now expecting the
benchmark to reach the 8,000 level by 2026-end.
“As elevated backlogs convert into recognized revenue, cloud
growth should remain well supported, helping validate rising AI
capex, strengthen order coverage, and further ease ROIC (return
on invested capital) concerns,” J.P. Morgan analysts said.
The brokerage also revised its S&P 500 earnings-per-share
forecasts to $365 for 2026 and to $420 for 2027. It had earlier
expected $350 for 2026 and $390 for 2027.
Of the 436 S&P 500 companies that had reported June-quarter
results through Friday morning, 85.1% beat analyst expectations,
according to LSEG data, well above the long-term average of 68%
since 1994.
J.P. Morgan said the benefits of rising AI investments were
clearer in the second quarter, especially at Google,
Amazon and Microsoft, as strong cloud growth,
larger backlogs and better cash-flow visibility eased investor
concerns about returns on spending.
Despite the strong earnings backdrop, J.P. Morgan maintained
its forward valuation multiple target at about 20 times, citing
higher interest rates, geopolitical risks and a large supply of
equity and debt issuance.
The S&P 500 has gained 13.3 per cent so far this year, buoyed by AI
optimism, even as uncertainty over the reopening of the Strait
of Hormuz and talks involving Iran, Oman and the
has kept pressure on oil markets and shipping.