Wall Street's bullish view on U.S. equities is strengthening as major brokerages push year-end S&P 500 targets above 8,000. Citigroup now sees the index ending 2026 at 8,100, supported by resilient corporate profits and continued momentum from artificial intelligence spending.
Highlights
- Citigroup raised its 2026 year-end S&P 500 target to 8,100 from 7,700, implying about 10% upside from the last close.
- Citigroup lifted its S&P 500 2026 earnings-per-share forecast to $350 from $320 and introduced a preliminary 2027 target of $400.
- Citi cites strong AI-driven gains and broader market impact but notes risks if the current capital expenditure supercycle fades after 2027.
Target increase and earnings assumptions
As reported by Reuters, Citigroup raised its 2026 year-end target for the S&P 500 to 8,100 from 7,700, implying about 10% upside from the benchmark's last close. The brokerage also lifted its 2026 earnings-per-share forecast for the index to $350 from $320 set in December 2025, and introduced a preliminary 2027 target of $400.The benchmark index is up nearly 8% so far this year, although it fell sharply on Friday after stronger-than-expected nonfarm payrolls data. In a note dated June 5, Citi says it has high confidence in continued earnings beats through year-end.
AI-driven gains and longer-term risks
Citigroup joins other bullish brokerage calls that expect AI momentum and strong corporate earnings to offset near-term inflation pressures and supply risks tied to the Middle East conflict. Citi strategists say AI-related ecosystems are likely to expand beyond technology companies, broadening the market impact of that spending cycle.At the same time, the bank warns that the durability of AI-led growth beyond 2027 remains uncertain. Citi says the current environment looks less like a traditional cycle and more like a one-time capital expenditure supercycle, which could eventually raise the burden on earnings growth and market expectations, with the risk of an equity market hangover if spending later decelerates.
In our earlier article on the market sell-off after the stronger-than-expected May U.S. jobs report, we explained how the upside payrolls surprise pushed Treasury yields higher and revived expectations of additional Fed rate hikes. We also noted that higher borrowing costs tend to hit richly valued AI and semiconductor stocks hardest, while heavy AI investment could increase equity issuance and add pressure to the tech-led rally.
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