Wall Street spent the bulk of 2026 figuring out whether the stock market has come too far, too fast.
However, according to TheFly, Citi analysts are looking past the immediate damage as they revamp their S&P 500 target.
They make the case that something far more durable may be taking shape, specifically a robust profitability cycle driven by heavy AI infrastructure spending.
For perspective, stock market gains typically come from a couple of places.
Investors can either pay more for the same level of earnings, pushing prices higher, or businesses can actually make a lot more money, offering a sturdier foundation.
Citi’s Scott Chronert is leaning heavily on the latter.
His updated S&P 500 forecast hinges on genuine, sustainable earnings growth, a thesis that could potentially revitalize Wall Street.
Moreover, it comes at a point where the markets are dealing with renewed inflation worries, Middle-East related tensions, and higher rate fears.
For context, the S&P 500 closed Friday, June 5, at 7,383.74, down 200.57 points, or 2.64% after hitting a record close of 7,609.78 on June 2.
The big drop on Friday was linked to a stronger-than-expected May jobs report, which showed the U.S. economy adding 172,000 jobs. The report fueled some major concerns about the Federal Reserve keeping interest rates higher for longer.
Chip stocks took the hardest hit, with the Philadelphia Semiconductor Index losing north of $1 trillion in value according to Reuters, with Nvidia, Intel, AMD, and Broadcom among the losers.
Over the past three months, though, the trend has been mostly positive.
The S&P 500 was up 553.03 points, or 8.10%, since March 5, despite the Friday debacle.
Citi analysts, though, feel it’s more of a temporary blip, with Citi forecasting that the AI spending wave becomes large enough to efficiently reshape the market’s earnings power.
Wall Street price targets for the S&P 500
Citi’s S&P 500 call leans on stronger earnings
Chronert and his team raised the bank’s year-end 2026 S&P 500 target to 8,100, up from 7,700.
More Wall Street:
That’s a 400-point increase, or a 5.2% increase from the previous forecast.
Chronert’s case is purely built on the strength of earnings, and he now expects the S&P 500 index-level earnings to surge to an eye-catching $350 in 2026, with early estimates of $400 in 2027.
