Citigroup: Raises S&P 500 Year-End Target to 8,100 Points, AI Profit Growth as Main Driver

Odaily reported that Citigroup stated profit growth driven by AI construction is expected to push the S&P 500 index above the 8,000-point mark in 2026. The bank raised its year-end target for the S&P 500 index this year to 8,100 points, representing an upside potential of over 9.5% from last Friday's closing price, compared to the previous target of 7,700 points.

Strategist Cronert predicts that S&P 500 earnings per share will reach $350 in 2026 and rise to $400 in 2027. Cronert stated, "AI tailwinds are driving a surge in the fundamentals of related industries, and we are confident that earnings will continue to exceed expectations through year-end." He noted that positive earnings surprises in the first quarter were unusually widespread, and while this trend may be difficult to sustain, the rate of positive surprises in the coming quarters will still be above normal levels.

Cronert believes that earnings will replace valuation expansion as the main driver of the index. He added that although uncertainties surrounding a US-Iran war, inflation, and the interest rate path could trigger volatility, AI spending remains the focus for investors. Regarding concerns about an AI bubble, Cronert believes that the market's pursuit of AI growth is far from over. "We are in the middle of the game. Future P/E ratios will tend to moderate, and earnings growth will need to take on more responsibility," he said. (Jin Shi)