JPMorgan has raised its year-end target for the S&P 500 to 7,600, up from a previous target of 7,200, after revising up its corporate earnings projections. The bank said the adjustment reflects stronger expected profits rather than any expansion in the market's valuation multiple.
In its updated outlook, the firm increased its 2026 S&P 500 earnings-per-share (EPS) estimate to $330 from $315, and boosted its 2027 EPS estimate to $385 from $355. Both revised EPS figures sit above the prevailing Wall Street consensus, according to the bank's report.
JPMorgan maintained its assumed forward price-to-earnings multiple at 22x, indicating the higher price target is the product of better projected earnings growth. Strategists led by Dubravko Lakos-Bujas noted that if geopolitical frictions ease quickly, the multiple could expand toward 23x, which would translate to an S&P 500 level near 8,000.
The firm singled out a resurgence in investor appetite for artificial intelligence-related names as a principal catalyst for the recent rally. Headlines about Anthropic's most powerful model, Mythos, were highlighted as reinvigorating interest in the AI theme. JPMorgan's strategists reported that since April 7, approximately 66% of S&P 500 companies tied to AI have outperformed the broader index.
That shift in sentiment follows a period earlier in the year when concerns over rising capital expenditures had dampened enthusiasm for the sector. JPMorgan pointed to Anthropic's revenue run rate, which it said has tripled year-to-date, as an example of the fast-moving developments in AI that are shaping investor expectations.
On capital spending more broadly, the bank projects AI-related capital expenditures will grow 58% year-on-year to reach $775 billion by the end of 2026. Consensus estimates, the strategists noted, place the last-twelve-month AI capex at roughly $800 billion by the end of the first quarter of 2027. JPMorgan said the Mythos headlines should reduce investor skepticism toward capex, implying that spending tied to AI development may be interpreted more favorably going forward.
Despite the upbeat revisions, the strategists cautioned there are near-term vulnerabilities. The 10-day relative strength index (RSI) sits above the 95th percentile following the sharp run-up from recent lows, a technical reading the bank flagged as increasing the likelihood of a short-term consolidation phase before any continuation of gains.
The geopolitical environment, while notably calmer than in the prior month, remains unsettled. The bank pointed out that oil prices continue to trade around the $90 per barrel level, a reminder that energy market dynamics and geopolitical news could reintroduce volatility to equity markets.
Looking at corporate reporting, JPMorgan expects the current first-quarter earnings season to present a more constructive picture than the preceding quarter, when market sentiment had been weighed down by concerns over AI spending momentum. The bank added that recent positive earnings revisions have been concentrated in a relatively small set of technology and energy companies, suggesting scope for broader upside remains if revisions become more widespread.
Overall, the bank's adjustment to its S&P 500 target rests squarely on the bump to projected earnings and a rekindled AI narrative. While strategists left their valuation multiple unchanged, they indicated potential for modest multiple expansion should geopolitical tensions continue to ease.