J.P. Morgan on Tuesday raised its year-end target
for the S&P 500 index to 7,600, citing AI and tech-driven earnings, just
weeks after lowering its forecast, with a ceasefire between the U.S. and Iran
aiding sentiment.
The revised target implies an upside of about 6.9% from Monday’s close of
7,109.14. The Wall Street brokerage had cut its target to 7,200 from 7,500 last
month.
J.P. Morgan also hiked its annual earnings-per-share forecast for the index
to $330 from $315. For 2027, it increased its EPS target to $385 from $355.
U.S. equities have rebounded from their March lows following a ceasefire in
the Middle East war.
“Given the sharp rally from recent lows and a geopolitical backdrop that,
while significantly de-escalated, remains in flux, there is a meaningful risk
that the market enters a short-term consolidation phase before resuming its
upward trajectory,” J.P. Morgan said in a note.
However, the brokerage expects the index to hit nearly 8,000 by year-end if
there is a quick resolution to the conflict.
A strong momentum in AI and tech stocks helped the S&P 500 and Nasdaq
touch record highs last week alongside expectations of robust
first-quarter earnings.
“The emergence of Anthropic’s Mythos has helped reignite the bullish AI
trade after a shaky start to the year,” J.P. Morgan said.
Anthropic unveiled its AI model ‘Claude Mythos’ earlier this month, but
halted its release over concerns that it could expose hidden cybersecurity
vulnerabilities.
The brokerage said there is still room for further upside in consensus
earnings estimates, noting recent positive revisions have been concentrated in a
small group of technology firms and the energy sector.
“We expect the US to remain a core long-term holding in global portfolios
due to its breakthrough innovation, overall superior growth, and capital
returns, even though the diversification theme and repatriation flows out of the
US are likely to persist in the background,” it added.