JPMorgan raised its year-end S&P 500 target to 8,000 from 7,800, pointing to a strong second-quarter earnings season. The bank also lifted its earnings-per-share estimates for 2026 and 2027 and flagged early signs that AI-related spending among hyperscalers may start paying off.
JPMorgan raised its year-end target for the S&P 500 to 8,000, up from 7,800, citing a strong second-quarter earnings season. Strategists led by Dubravko Lakos-Bujas, JPMorgan's global head of markets strategy, made the call in a note on Monday.
Earnings beats drive the upgrade
With 87% of the index's companies having already reported, results have proved strong across a number of industries, the strategists wrote. The new 8,000 call puts JPMorgan on par with several other Wall Street banks, including Goldman Sachs.
The strategists also raised their earnings guidance to $365 per share for 2026, a 35% increase from last year. They see $420 per share for 2027, a 15% rise versus this year's estimate.
AI spending faces closer scrutiny
Investors' main focus this earnings season has been capital expenditure outlooks among artificial-intelligence hyperscalers, along with evidence of returns on those investments, the strategists said. They pointed to hints of this trend at Alphabet, Amazon and Microsoft, where investors rewarded the stocks for improved cash flow visibility, robust cloud growth and backlog expansion.
Free cash flow is still forecast to stay negative next year for most hyperscalers. Yet demand from customers and contracted orders are improving relative to AI spending, the strategists said, which may let monetization ramp faster than spending and ease concerns about returns on invested capital.
Record close follows weak jobs data
The upgrade follows the S&P 500's close at a record high of 7,758 on Friday. The move came on weaker-than-expected payrolls data for July, which casts doubt on an interest-rate hike by the Federal Reserve in September.
JPMorgan noted that almost four in five of the index's constituents that have reported so far beat earnings estimates, while 73% topped revenue forecasts.
Source: MarketWatch
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