One Wall Street strategist is turning more bullish on the S&P 500 (^GSPC) as the benchmark index continues to soar to record highs.
Evercore ISI strategist Julian Emanuel boosted his 2025 year-end price target on the index to 6,250 from 5,600 and now sees the S&P 500 climbing about 20% to 7,750 by the end of 2026, powered by what he calls a once-in-a-generation technological shift to artificial intelligence.
The near-term call represents a modest pullback from current levels. Emanuel’s longer-term outlook is more optimistic, underscoring his view that AI adoption will drive both earnings and valuations higher.
His bull case goes further: Emanuel envisions the S&P 500 rising to 9,000 if an ‘AI-driven asset bubble’ takes hold, a scenario he warns could be fueled by an overly accommodative Fed even as inflation pressures linger.
Emanuel said corrections of 10% or more are possible along the way but views them as buying opportunities within a structural bull market.
“Twice in a lifetime,” Emanuel wrote in a Sunday note, comparing today’s AI-driven rally to the internet boom of the 1990s. The difference this time, he argues, is that AI adoption is unfolding more quickly, cutting across a wider swath of industries and creating broader investment opportunities.
In addition to his new S&P targets, the strategist raised his earnings forecasts to $264 EPS for 2025 from $255 and $287 for 2026 from $272, citing both resilience to tariffs and the productivity lift from AI.
The forecasts echo a broader theme emphasized by others on Wall Street: Earnings remain the key driver for stocks.
FactSet data published Friday showed that, with 98% of S&P 500 companies having reported, second quarter earnings are on track to rise 11.9% year over year — marking the third consecutive quarter of double-digit growth.
Positive surprises have been widespread, with 81% of companies beating EPS estimates, while the Magnificent Seven stocks once again stood out, posting 26.6% earnings growth compared with 8.1% for the rest of the index.
Citi, which has kept its 6,600 year-end S&P 500 forecast intact, reiterated its full-year earnings outlook of $272 on Monday, pointing to policy support and resilient consumer spending as additional tailwinds.
The firm’s US equity strategy team, led by Scott Chronert, said the 6,600 year-end target reflects confidence in continued earnings momentum after strong second quarter results, “less bad than feared” tariff impacts on businesses, and new tax incentives from President Trump’s “One Big, Beautiful Bill.”
finance.yahoo.com
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