UBS raises S&P 500 year-end target on stronger earnings outlook

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UBS raises S&P 500 target

Highlights

UBS raised its S&P 500 year-end target to 8,100 from 7,500, forecasting over 8% gains from current levels near 7,440.
Strategist Keith Parker anticipates S&P 500 profit growth above 28% in 2024, with semiconductor companies driving earnings and potential for valuations below fair value.
UBS's target is now the second highest in CNBC's survey, reflecting conviction that technology-led, broad-based earnings can offset ongoing geopolitical and macroeconomic risks.

Earnings outlook drives higher target

As first reported by CNBC, UBS has lifted its year-end target for the S&P 500 to 8,100 from 7,500, implying the benchmark could gain more than 8% over the next six months from around 7,440. The bank also expects the index could reach 8,900 in 2027, placing its latest forecast among the most bullish on Wall Street.

Strategist Keith Parker says the firm remains constructive on U.S. equities because technology-led earnings growth continues to support further upside during the AI investment cycle. He points to signs of broader capital expenditure and demand extending beyond the technology sector, reinforcing the case for continued market gains.

Parker also argues that investors are underestimating earnings strength, with the S&P 500 potentially delivering profit growth of more than 28% this year, above market consensus. He says semiconductor companies are a major driver, as they build backlogs to keep pace with demand, while improving profits could lower the market's overall valuation multiple and leave stocks trading below fair value.

Market risks remain, but UBS sees upside

Recent trading has been pressured by escalating hostilities in the Middle East and an uncertain macroeconomic backdrop. Even so, Parker says the market has already absorbed much of the maximum pressure from the U.S.-Iran war and policy uncertainty linked to the Trump administration.

UBS's revised target is now the second highest in CNBC's 2026 market strategist survey, behind only Oppenheimer's 8,150 forecast. The average strategist target stands at 7,850, suggesting UBS is taking a notably more optimistic view than much of the broader market.

Parker says markets appear to be pricing in slower growth, lower margins or higher rates even as earnings revisions, profitability and long-term growth expectations continue to improve. He adds that geopolitical tensions, interest rates and AI-related risks still threaten pullbacks, but he sees an attractive risk-reward setup for equities in the coming months and into next year.

In our earlier article on IQE’s upgraded 2026 outlook, we explained how accelerating demand from AI infrastructure and data centres pushed the UK chip wafer maker to lift its revenue growth forecast to above 30%. We also noted that stronger first-half trading and rising uptake of Indium Phosphide solutions highlighted how the AI buildout is feeding through the semiconductor supply chain and supporting improved profitability expectations.

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