Barclays has increased its year-end S&P 500 target to 7,950, up from the previous 7,800. This adjustment suggests an approximate 4% upside from the index's recent closing level. The bank attributes this outlook to sustained demand for artificial intelligence and strong earnings performance from major technology companies.
The firm revised its 2026 earnings estimate to $365 per share from $337, while the 2027 forecast was raised to $414 from $389. Barclays maintains its 2027 index target at 8,800. Data indicates that 86% of the 492 S&P 500 companies that have reported earnings exceeded analyst expectations.
Capital expenditure by hyperscalers is projected to exceed $1.1 trillion in 2027, marking a 67% increase from the prior year. Analysts expect Google, Amazon, and Meta to be the primary contributors to this spending. Growth is anticipated to moderate in 2028, with spending still projected to rise by approximately 30%.
Other financial institutions have also updated their forecasts for the S&P 500. JPMorgan set its year-end target at 8,000, while CFRA expects the index to reach 8,050. HSBC increased its target to 8,100 from 7,650, citing robust earnings and ongoing investments in artificial intelligence infrastructure.
AI-related stocks currently represent about 45% of the S&P 500 market capitalization. While the broader index is up 11.55% year-to-date, the index excluding AI enablers has seen a 4.48% gain. Barclays remains cautious regarding valuations due to factors including inflation, geopolitical uncertainty, and potential interest rate paths.
