S&P 500 could hit 8,000, HSBC says in bullish outlook

HSBC has raised its year-end target for the S&P 500, citing resilient corporate earnings and continued momentum from major technology companies powering the artificial intelligence boom.

The bank lifted its forecast for the benchmark index to 7,650 from 7,500, implying further upside from current market levels after U.S. equities recently climbed to fresh record highs, News.Az reports, citing Reuters.

Wall Street’s rally has been fueled by investor enthusiasm surrounding AI-related investments and expectations for strong earnings growth, even as markets continue to monitor inflation risks linked to elevated oil prices and geopolitical tensions in the Middle East.

According to HSBC strategists, earnings remain the key driver supporting the market. The bank expects S&P 500 earnings per share growth of around 20% in 2026, estimating profits of roughly $325 per share for the index.

The so-called “Magnificent Seven” technology giants are expected to continue leading gains, reflecting the dominant role of large-cap AI-linked companies in the current market cycle.

First-quarter earnings for S&P 500 companies are on track to rise nearly 29% year over year, according to LSEG I/B/E/S data, with much of the growth driven by major technology firms benefiting from AI demand.

Despite the bullish outlook, HSBC warned that market sentiment remains somewhat fragile because the rally has been concentrated in a relatively small number of stocks. Many companies are still trading below their 52-week highs, suggesting broader participation has yet to fully develop.

Strategists said the index could potentially surpass 8,000 points if technology valuations continue strengthening, AI-driven earnings growth expands across more sectors, and the broader economic environment remains supportive.

The latest forecast reflects growing confidence among major financial institutions that corporate profits and AI investment trends may continue sustaining the historic rally in U.S. equities through the remainder of the year.

News.Az 

By Aysel Mammadzada