JPMorgan's global head of market strategy, Dubravko Lakos-Bujas, announced an increase in the firm's year-end S&P 500 target from 7,800 to 8,000, indicating a projected 3% gain from the index's recent close at 7,757.64.
This adjustment comes after a robust second-quarter earnings season, where 78% of the 87% of S&P 500 companies that reported exceeded analyst expectations, with an average earnings surprise of about 11%.
The bank noted that concerns over the return on investments in artificial intelligence (AI) are likely to diminish as major companies like Alphabet, Amazon, and Microsoft begin to report profits from their AI initiatives.
Lakos-Bujas highlighted that while free cash flow for many hyperscalers may remain negative through fiscal year 2027, improving demand and order coverage suggest that revenue growth could accelerate, alleviating worries about capital returns.
Additionally, he revised his earnings estimates for the S&P 500 to $365 for 2026 and $420 for 2027, projecting year-over-year growth of 35% and 15%, respectively. Despite these optimistic forecasts, he maintained a forward earnings multiple of about 20x due to potential higher interest rates and ongoing geopolitical uncertainties.
Other firms, including CFRA and UBS, have also raised their S&P 500 targets recently, with CFRA now at 8,050 and UBS at 8,100, positioning JPMorgan among the most bullish on Wall Street