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

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Barclays raises S&P 500 target

Highlights

Barclays raised its S&P 500 year-end target to 7,950 from 7,800, forecasting continued earnings momentum amid strong second-quarter tech results.
86% of the 492 S&P 500 companies reporting exceeded analysts' estimates in Q2, well above the 67.5% long-term average, according to LSEG data.
Barclays increased its 2026 S&P 500 EPS estimate to $365 from $337, but downgraded utilities to neutral due to regulatory uncertainty and data center permitting challenges.

Earnings outlook drives target increase

As reported by Reuters, Barclays on Wednesday lifted its year-end target for the S&P 500 to 7,950 from 7,800 after a strong second-quarter earnings season, particularly among technology companies. The revised target stands about 3.6% above the index's last close.

U.S. corporate earnings have beaten Wall Street expectations in the second quarter, with 86% of the 492 S&P 500 companies that have reported results exceeding analysts' estimates, according to data compiled by LSEG. That is above the long-term average of 67.5%, and Barclays says AI investment and healthy economic activity should continue to support earnings momentum in the coming quarters.

The brokerage also raised its 2026 earnings-per-share forecast for the S&P 500 to $365 from $337. At the same time, it says it remains conservative on valuations because of concerns over the durability of AI spending, resilient inflation, geopolitical uncertainty and a more hawkish rate outlook.

Sector caution and broader market stance

Even with those concerns, the benchmark index has risen 12.1% this year. Barclays also downgraded the utilities sector to neutral from positive, citing regulatory uncertainty including challenges tied to wildfire liability reform and rising opposition to data center permitting in some U.S. states.

Barclays joins other global banks that are becoming more bullish on the index. HSBC raised its own year-end target on Tuesday, arguing that strong corporate earnings and continued spending on AI infrastructure should extend the rally, while UBS Global Research, Goldman Sachs and Citigroup all expect the S&P 500 to finish the year at or above 8,000.

In our earlier article on pushback against AI data center construction, we looked at how rising community and regulatory resistance could slow new projects and tighten supply. We noted that this dynamic may bolster pricing power and near-term outlooks for established data center REITs, even as permitting delays and moratoriums add longer-term growth and execution risks for the broader AI infrastructure buildout.

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