HSBC has raised its year-end target for the S&P 500 to 7,650 from 7,500, pointing to resilient corporate earnings and continued momentum from artificial intelligence-related investments.
The revised forecast implies additional upside from current levels after U.S. equities recently climbed to record highs. Investor optimism around AI infrastructure spending and technology sector growth has helped offset concerns tied to inflation and geopolitical tensions in the Middle East.
HSBC expects earnings per share growth for the S&P 500 to reach roughly 20% in 2026, driven largely by the “Magnificent Seven” technology companies. AI-focused firms continue to account for a significant share of market gains as demand for computing infrastructure, cloud services, and AI applications accelerates.
According to LSEG I/B/E/S estimates, first-quarter S&P 500 earnings are on pace to rise nearly 29% year over year, with major AI beneficiaries leading performance. HSBC strategists noted, however, that the recent rally has remained relatively narrow, with many stocks still trading below their 52-week highs.
The bank added that the index could potentially surpass 8,000 if AI-driven earnings growth expands beyond megacap technology firms and broader market participation improves. Continued enthusiasm around AI infrastructure, software adoption, and high-profile technology IPOs could further support valuations across sectors.
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