Key facts
- Barclays raised its S&P 500 year-end target to 7,950.
- The new target is 3.6% higher than the index's previous close.
- Barclays increased its 2026 S&P 500 EPS forecast to $365.
- The utilities sector was downgraded to neutral from positive due to regulatory uncertainties.
Barclays has raised its year-end target for the S&P 500 index to 7,950 from 7,800, citing a strong second-quarter earnings season led by technology companies and ongoing AI investment. The revised target represents a 3.6% increase from the index's previous close.
U.S. corporate earnings have surpassed expectations, with 86% of the 492 S&P 500 companies that have reported results exceeding analysts' estimates, a significant increase from the long-term average of 67.5%. Barclays attributes this momentum to AI investment and robust economic activity.
Despite these positive trends, Barclays maintains a conservative stance on valuations due to concerns about the sustainability of AI spending, persistent inflation, geopolitical uncertainties, and a more hawkish interest rate outlook. The benchmark index has still managed a 12.1% gain this year.
The brokerage also increased its 2026 earnings-per-share forecast for the S&P 500 to $365 from $337. However, Barclays downgraded the utilities sector to "neutral" from "positive," citing regulatory uncertainties, including wildfire liability reform and opposition to data center permitting.
Other financial institutions are also bullish on the index. HSBC and UBS Global Wealth Management recently raised their year-end targets above 8,000, and UBS Global Research, Goldman Sachs, and Citigroup project the S&P 500 will finish the year at or above 8,000.