Banking behemoth JPMorgan Chase is raising its year-end forecast for the S&P 500 for two main reasons.
The bank’s team of strategists led by Dubravko Lakos-Bujas predicts that the S&P 500 will end 2026 at 7,600, up from a prior target of 7,200, reports Bloomberg.
The team expects stronger earnings due to renewed investor enthusiasm in the artificial intelligence (AI) sector and de-escalating geopolitical risks in the Middle East as the war between the United States and Iran may be winding down.
The bank is now forecasting the 2026 S&P 500 EPS (earnings per share) at $330, an increase from a prior forecast of $315, and the 2027 estimate is now at $385 up from $355.
The updated forecast leaves the forward multiple, or price-to-projected-earnings, unchanged at 22x.
However, Lakos-Bujas says that if the geopolitical tensions reach a quick resolution, the multiple may expand to 23x, lifting the S&P500 2026 projection to around 8,000.
The team says that research firm Anthropic helped catalyze a resurgence in the AI investment theme when it previewed on April 7th its latest most powerful AI model Mythos. Since then, 66% of the S&P’s AI-related equities outperformed.
Despite the bullish outlook, the team warns that the market may enter “a short-term consolidation phase before resuming its upward trajectory” due to risks, including oil prices remaining elevated and continuing geopolitical tensions, even though they have improved.
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