Citi Sees the S&P 500 Hitting 8,100 – 2 ‘Strong Buy’ AI Stocks It Says Could Surge Alongside It
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Citi Sees the S&P 500 Hitting 8,100 – 2 ‘Strong Buy’ AI Stocks It Says Could Surge Alongside It
013 mins
First-quarter earnings season is now in the rearview mirror, and with the second quarter entering its final stretch, investors are beginning to focus on what comes next. One theme, however, continues to dominate the market narrative: AI.
AI has already been a powerful force behind corporate earnings and stock market gains, but some strategists believe the impact is only beginning to show up in the numbers. Among them is Citi’s Scott Chronert, who has become even more bullish on the outlook for both corporate profits and the broader market.
In response, Chronert has raised his earnings forecasts for the S&P 500 and increased his year-end 2026 target for the index, arguing that traditional economic models are struggling to account for the breadth of the AI spending cycle now driving growth across multiple industries.
“The underlying earnings trajectory for the S&P 500 is moving down a path that is way beyond what we expected headed into this year. Q1 results have set the stage, which should drive further momentum for the remainder of this year and into next. We are increasing our index level earnings estimate to $350 for ’26 and initiating a $400 preliminary estimate for ’27. Predicated on fundamental drivers, our end of ’26 base case target is lifted to 8100 from the 7700 projection we established last December… With Q1 earnings behind us, it is clear that AI tailwinds are triggering a rather episodic event. Traditional macro models for projecting earnings seem increasingly misplaced as the AI inspired spending surge is manifesting across many sectors,” Chronert opined.
Citi’s stock analysts have been busy, picking out shares that are primed to gain in a growth environment, and AI stocks are high on their list. In particular, they’ve singled out two AI names that could surge as the S&P 500 climbs. The TipRanks database shows that both have also garnered enough Buy recommendations from Wall Street analysts to earn Strong Buy consensus ratings.
We’ll start with Cerebras Systems, a well-known innovator in fast AI and one that is giving Nvidia a run for its money. The company’s Wafer Scale Engine takes AI chip capabilities to the next level. Designed from the start for ultra-fast AI workloads, it is 58 times larger than traditional GPUs.
Cerebras doesn’t stop there. Its CS-3 system offers ‘cluster-scale power in a mini-fridge size,’ putting fast AI capabilities to work in fields such as medical research, cryptography, energy, and agentic AI. Cerebras’ customers use its CS systems, the CS-2 and CS-3, to build supercomputer units on-site. It’s all part of the company’s mission to make AI faster and more energy efficient, as well as more easily accessible around the world.
The technology has also won over OpenAI, which signed a multi-year agreement with Cerebras for large-scale AI inference capacity. The deal helped build a backlog of roughly $24.6 billion and stands as a major endorsement of the company’s AI computing platform.
That commercial momentum helped fuel investor enthusiasm when Cerebras finally entered the public markets on May 14. The company sold 30 million shares at $185 apiece and, including the underwriters’ 4.5 million-share purchase option, raised roughly $6.38 billion in gross proceeds. The $185 initial pricing was significantly higher than the expected price range of $115 to $125 per share.
However, CBRS has tumbled since the IPO, and the stock, which closed at $311 on its first day of trading, is down 27% from that level. The decline appears to reflect a combination of profit-taking following the stock’s explosive debut, concerns about its lofty valuation, and investor scrutiny of the company’s ability to execute on its massive backlog, much of which is tied to OpenAI.
While those concerns have weighed on sentiment, Atif Malik, a Citi 5-star analyst ranked No. 3 out of thousands of analysts tracked by TipRanks, argues that investors should focus on Cerebras’ competitive positioning and ability to deliver fast AI at scale.
“We believe Cerebras has the first mover advantage and competes in the subset of inference stack where latency is a first-order constraint (fast-inference), a segment that is itself growing faster than inference broadly as reasoning models proliferate… Within the fast inference market TAM of $130B by 2030, we expect Cerebras leveraging its unique wafer scale technology and mostly serving Open AI, AWS, and others to be the market leader and achieve 40-50% of the market with likely Nvidia through its upcoming LPX products (via Groq acquisition) and Google via its recently announced TPUi platform right behind Cerebras,” Malik noted.
Malik backs up that view with a Buy rating and a $340 price target, implying an upside potential of 50% by this time next year. (To watch Malik’s track record, click here)
The broader Wall Street community is similarly enthusiastic. All 10 analyst reviews issued on the stock so far have been positive, giving Cerebras a unanimous Strong Buy consensus rating. With shares currently trading at $226.82, the average price target of $294 points to potential gains of ~30% over the coming year. (See CBRS stock forecast)
The second AI stock under Citi’s radar is Oracle, a venerable leader in the software industry. Oracle has long been known for its cloud computing business, and in recent years has emerged as an important player in AI infrastructure. The company offers a broad portfolio of cloud-based services, and its Oracle Cloud Infrastructure (OCI) platform has become a key provider of computing capacity for leading AI developers.
Oracle supplies customers with the infrastructure, data management, and networking services needed to build and deploy next-generation AI applications. Beyond AI, the company remains a leading provider of enterprise software, offering industry-specific solutions across sectors such as automotive, banking, retail, healthcare, and utilities.
The AI momentum is showing up in Oracle’s operating results. During fiscal Q3, AI infrastructure revenue jumped 243% year-over-year, while OCI revenue surged 84% to $4.9 billion. Total revenue came in at $17.2 billion, up 22% from the year-ago quarter and $281 million ahead of Wall Street’s forecast. Cloud revenue, which includes infrastructure and software-as-a-service offerings, climbed 44% to $8.9 billion. At the bottom line, Oracle earned non-GAAP EPS of $1.79, beating consensus estimates by $0.10 per share.
The company’s future growth visibility is reflected in its massive remaining performance obligations (RPO). In fiscal 3Q26, Oracle reported RPO of $553 billion, a staggering 325% increase from the prior year. Management’s confidence is growing as well; following the quarter, Oracle raised its fiscal 2027 revenue target to $90 billion.
With that momentum as a backdrop, Oracle will report fiscal 4Q26 results today, June 10, after the market close, with analysts expecting revenue of just over $19 billion and non-GAAP earnings of $1.96 per share.
Oracle has caught the eye of Citi’s Tyler Radke, who writes of the company, “We expect FQ4 to show strength in IaaS capacity additions, continued ‘responsible’ bookings and a greater focus on ROIC. We expect in-line but accelerating IaaS growth as our management touchpoints and readthroughs suggest no major timing issues…. While investor concerns linger on financing/execution of capacity buildouts, we believe ORCL remains on track to deliver one of the strongest revenue/EPS accelerations in tech as large AI contracts ramp.”
Following this, Radke puts a Buy rating on ORCL shares, along with a $330 price target that implies a one-year upside potential of 60%. (To watch Radke’s track record, click here)
Oracle currently holds a Strong Buy consensus rating from Wall Street, based on 33 recent reviews that include 28 Buys and 5 Holds. The stock is priced at $205.81 and its $269.93 average target price indicates potential for a 31% gain in the coming months. (See ORCL stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
