Key facts
- Citigroup raised its S&P 500 year-end target to 8,100 from 7,700.
- The brokerage increased its 2026 S&P 500 EPS forecast to $350, up from $320.
- A preliminary 2027 S&P 500 EPS target of $400 was introduced.
- Key drivers cited include continued earnings beats and an AI-driven capital expenditure supercycle.
- Citigroup cautioned that the persistence of AI-driven growth beyond 2027 is uncertain.
Citigroup has raised its year-end target for the S&P 500 index to 8,100 from 7,700, anticipating continued strength in corporate earnings and a significant AI-driven capital expenditure supercycle. The brokerage also increased its earnings-per-share forecast for 2026 to $350 from $320 and introduced a preliminary target of $400 for 2027.
The firm expressed high confidence in earnings "beats" through the end of the year, suggesting that the current market momentum is driven by more than a traditional economic cycle. Citigroup strategists noted that while AI-related ecosystems are expected to grow beyond the technology sector, the long-term outlook hinges on U.S. companies delivering on AI-promised productivity gains beyond 2027.
However, Citigroup cautioned that the persistence of AI-driven growth past 2027 remains uncertain. They suggested that a deceleration or decline in spending after this period could eventually lead to an "equity market hangover effect," though this is not currently anticipated in the near term. Other brokerages also provided their 2026 forecasts, with BofA Global Research at 7,100, Societe Generale at 7,300, UBS Global Research at 7,500, and Goldman Sachs and Morgan Stanley at 8,000.