Citigroup sets S&P 500 target at 7,700 for 2026
Citigroup (C) has set a year-end target of 7,700 for the S&P 500 index in 2026, citing strong corporate earnings and ongoing support from investments in artificial intelligence.
In a note released on Friday, the brokerage highlighted that AI infrastructure build-out is expected to be a major theme next year, in line with other Wall Street projections. However, Citi predicts that the focus will gradually shift from companies enabling AI to those adopting the emerging technology, News.Az reports, citing Reuters.
“While the AI emphasis is expected to be persistent, the evolution will likely follow a perceived winner versus loser dynamic,” Citi strategists said.
The target suggests a 12.7% gain from the benchmark’s last close of 6,827.41 points. Citigroup also estimates the S&P 500’s earnings per share to reach $320 by the end of 2026, above the consensus forecast of approximately $310.
The widely-tracked index has gained about 16% this year, spurred broadly by investor optimism around AI, robust corporate profits and expectations of falling interest rates, despite fears of a market bubble and high technology valuations.
"To be clear, a high valuation starting point is a hurdle for the market, but not an insurmountable one. Rather, it puts increasing pressure on fundamentals to support the price action," Citi said.
As the current bull market enters its fourth year, bouts of volatility should be expected and may be more acute given implicit growth expectations, the brokerage added.
Citi expects the index to hit 8,300 in a bull-case scenario, and drop to 5,700 in the bear case.
The brokerage's year-end index target compares with Oppenheimer Asset Management's Street-high forecast of 8,100 and a Reuters poll in November that forecast the index would rise about 12% by the end of next year.
In November, UBS Global Wealth Management had also forecast a year-end target of 7,700 for the index.
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