HSBC raises S&P 500 year-end target to 8,100 on earnings strength

HSBC raised its year-end target for the S&P 500 to 8,100 from 7,650, betting that strong corporate earnings and continued spending on artificial-intelligence infrastructure will extend the benchmark’s rally. The revised target implies about 4.9% upside from the index’s last close.

The bank expects earnings per share to grow by more than 25% in the second half of 2026. Second-quarter corporate earnings have already exceeded expectations. According to LSEG data, 86% of the 492 S&P 500 companies that reported results beat analysts’ estimates, compared with a long-term average beat rate of 67.5%.

The index has gained 12.75% this year despite volatility linked to hostilities in the Middle East and concerns that resilient economic growth and persistent inflation could keep the Federal Reserve hawkish for longer. HSBC said investors remain focused on possible Fed rate increases, geopolitical uncertainty, the U.S. midterm elections and greater liquidity needs from initial public offerings and AI spending.

The firm said those concerns were largely overblown, but it also cautioned that the outlook for investor sentiment and equity valuations remained uncertain. Technology stocks have traded within a narrow valuation range despite stronger earnings and record margins, suggesting that achieving higher valuations could prove difficult.

Other major brokerages, including Goldman Sachs, Morgan Stanley and Citigroup, expect the S&P 500 to finish the year at or above 8,000.