Fundstrat lifts S&P 500 year-end target to 8,000 as earnings outlook improves

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Fundstrat lifts S&P 500 target

Highlights

Fundstrat Global Advisors raised its S&P 500 year-end target to 8,000 from 7,700, citing improved 2027 earnings-per-share expectations and a lower target P/E multiple.
Fundstrat identifies artificial intelligence, energy infrastructure, onshoring, and blockchain as primary earnings and economic growth drivers for 2024, supporting further P/E multiple expansion.
Fundstrat's 'Top 5' large-cap picks now include Caterpillar alongside Advanced Micro Devices, Arista Networks, Goldman Sachs, and Quanta Services, while Northrop Grumman, Palantir Technologies, and MicroStrategy join its 'Bottom 5' list.

Earnings outlook drives target increase

As reported by CNBC, Fundstrat Global Advisors raised its S&P 500 year-end target to 8,000 from 7,700, with Tom Lee saying the change is mainly tied to higher earnings-per-share expectations for 2027 and a lower target price-to-earnings multiple.

The revised forecast brings Fundstrat broadly in line with other optimistic calls on Wall Street. Goldman Sachs and Citigroup have already projected year-end targets of 8,000 and 8,100 respectively for the U.S. benchmark.

Fundstrat says the higher target is driven primarily by improving earnings expectations rather than richer valuations. The firm also continues to expect price-to-earnings multiples to expand, while maintaining that artificial intelligence investment, energy infrastructure spending, onshoring and blockchain adoption on Wall Street remain key drivers of earnings and economic growth this year.

Market tests and portfolio preferences

Lee warns that the path to 8,000 is unlikely to be smooth. Fundstrat expects markets to face three major tests later this year: a new Federal Reserve leadership team being put to the test, the potential unlocking of initial public offerings from closely watched companies including SpaceX and Anthropic, and the risk of petroleum product shortages linked to the Iran conflict.

At the portfolio level, Fundstrat reiterates its preference for technology, financials, industrials, small-cap stocks, and energy and basic materials. The firm adds Caterpillar to its large-cap “Top 5” list alongside Advanced Micro Devices, Arista Networks, Goldman Sachs and Quanta Services.

On the bearish side, Northrop Grumman, Palantir Technologies and MicroStrategy join Echostar and Texas Pacific Land on Fundstrat's “Bottom 5” list. For small- and mid-cap stocks, the firm adds Valmont Industries and Mueller Industries to its preferred list, while naming Weatherford International and AeroVironment among stocks investors should avoid.

Our earlier coverage on surging corporate profits and upgraded earnings forecasts explained how stronger-than-expected profit growth has helped keep equity markets resilient even amid geopolitical tensions, higher oil prices and U.S. policy uncertainty. We also noted the longer-term risk that today’s profit strength is being supported by large fiscal deficits and weaker household savings, which could eventually pressure valuations if bond yields rise.

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