Banking giant JPMorgan Chase is raising its year-end forecast for the S&P 500 for two main reasons.
The bank’s team of strategists led by Dubravko Lakos-Bujas predicts the S&P 500 will end at 7,600 in 2026, up from a previous target of 7,200. reports Bloomberg.
The team expects higher profits due to renewed investor enthusiasm in the artificial intelligence (AI) sector and de-escalating geopolitical risks in the Middle East as the war between the United States and Iran may be coming to an end.
The bank now forecasts 2026 earnings per share for the S&P 500 to be $330, up from a previous forecast of $315, and the 2027 estimate is now $385, up from $355.
The updated forecast leaves the forward multiple (price-to-projected earnings) unchanged at 22x.
However, Lakos-Bujas says that if geopolitical tensions are resolved quickly, this rate could increase to 23x, raising the S&P500 projection for 2026 to around 8,000.
The team says research firm Anthropic helped catalyze a resurgence in the AI investment theme when it previewed its newest and most powerful AI model Mythos on April 7. Since then, 66% of the S&P’s AI-related stocks have outperformed.
Despite the bullish outlook, the team warns that the market may enter “a near-term consolidation phase before resuming its upward trajectory” due to risks including still high oil prices and lingering geopolitical tensions, even as these have improved.
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