J.P. Morgan Lifts S&P 500 Target to 8,000 as AI Spending Finally Pays Off

J.P. Morgan raised its year-end S&P 500 target to 8,000 from 7,800, citing resilient earnings and growing confidence that hyperscalers' AI investments are converting into revenue growth. At least seven brokerages now expect the index at 8,000 by year-end, and EPS forecasts were lifted to $365 for 2026 and $420 for 2027.

Key Takeaways

J.P.
Morgan raised its year-end S&P 500 target to 8,000 from 7,800, citing resilient earnings and growing confidence that hyperscalers' AI investments are converting into revenue growth.
At least seven brokerages now expect the index at 8,000 by year-end, and EPS forecasts were lifted to $365 for 2026 and $420 for 2027.

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Wall Street's boldest call yet on the AI trade landed on Monday, as J.P. Morgan lifted its year-end target for the S&P 500 to 8,000 from 7,800 — joining at least six other brokerages that now see the benchmark hitting that milestone in 2026.

The new target implies roughly 3.1% upside from the index's last close of 7,757.64, and it rests on two pillars: corporate earnings that keep beating expectations, and growing conviction that the enormous AI capital spending by hyperscalers is finally converting into revenue growth.

"As elevated backlogs convert into recognized revenue, cloud growth should remain well supported, helping validate rising AI capex, strengthen order coverage, and further ease ROIC concerns," J.P. Morgan analysts wrote.

The bank also revised its S&P 500 earnings-per-share forecasts to $365 for 2026 and $420 for 2027, up from $350 and $390 respectively. The upgrade came as second-quarter reporting season closed out with remarkable strength: of the 436 S&P 500 companies that had reported June-quarter results through Friday morning, 85.1% beat analyst expectations — well above the long-term average of 68% since 1994, according to LSEG data.

J.P. Morgan said the payoff from AI investment was especially visible at Google, Amazon and Microsoft, where strong cloud growth, larger backlogs and better cash-flow visibility have eased investor concerns about returns on spending.

Yet the bank held its forward valuation multiple target at about 20 times earnings, citing higher interest rates, geopolitical risk and a large pipeline of equity and debt issuance. The S&P 500 has gained 13.3% so far this year, buoyed by AI optimism, even as uncertainty over the reopening of the Strait of Hormuz keeps pressure on oil markets and shipping.

The call adds to a wave of bullish targets: Morgan Stanley also lifted its year-end target to 8,000 from 7,800 and set a 12-month view of 8,300, saying resilient profits and AI adoption support further gains. With the AI trade powering both earnings and index targets higher, the debate has shifted from whether the rally can continue to how far it can run.