(Bloomberg) — Wall Street forecasters are rushing to boost their outlook for the S&P 500 (^GSPC) as robust corporate earnings and renewed enthusiasm around artificial intelligence fuel a record-breaking rally.
Deutsche Bank AG strategist Binky Chadha raised his year-end target for the US benchmark to 7,000 points, implying gains of more than 7% from current levels. His peers at Barclays Plc also increased their forecast, while the team at Wells Fargo Securities LLC expects gains of 11% by the end of next year.
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“There is froth, but as long as AI capex remains intact, the bull market should continue,” said Wells Fargo’s Ohsung Kwon, who took over as top equity strategist after Christopher Harvey left in August.
US stocks have been on a tear in the past few months on optimism around expected Federal Reserve interest-rate cuts alongside resilient economic growth. The S&P 500 closed at a record on Tuesday, bringing this year’s gains to . The technology-heavy Nasdaq 100 (^NDX) has surged .
Strategists more broadly have struggled to keep up with roller-coaster moves in the equity market this year triggered by President Donald Trump’s erratic policy moves. The cohort had slashed projections following sweeping global tariffs in April, before returning to bullish views as Trump dialed down his trade rhetoric.
Deutsche Bank’s Chadha, who lifted his target by nearly 7%, said half the estimated direct impact of tariffs has already flowed through into inflation. He also sees support for equities from investor positioning, better-than-expected economic growth and a weaker dollar.
A recent slowdown in the labor market has revived worries about a stalling economy, but analysts have continued to increase corporate earnings estimates after a smaller-than-feared hit from levies. S&P 500 earnings are expected to surge almost 10% in 2025 and by another 13% in 2026, according to data compiled by Bloomberg Intelligence.
At Barclays (BCS), strategist Venu Krishna now expects the S&P 500 (^GSPC) to end 2025 at 6,450, up from his previous forecast of 6,050, citing improving earnings and stabilizing global growth. His target implies a 1% decline from Tuesday’s close, half the drop predicted by strategists Bloomberg tracks.
