Jun. 25 at 3:19 PM
JPMorgan raised its S&P 500 YE26 TP to 7,800 citing an earnings upgrade cycle it described as "unprecedented," driven by the AI capex boom & an improving geopolitical backdrop following US-Iran peace progress
In a mid-year outlook note, consensus earnings growth has been revised higher by roughly +20% on avg for the next 2 years, "in lockstep w/ a near doubling of AI capex"
The bank also lifted its 2026 S&P 500 EPS est to
$350, representing +29% y/y growth, w/ FY27 EPS f/cast at
$390, though that figure sits below current consensus, reflecting "the risk of diminishing AI-related pricing power."
JPMorgan believes the scale of positive est revisions is "typically seen only after a shock or post-recession," w/ the catalyst in this cycle being last earnings season’s raised capex budgets & the April Anthropic headline "confirming the viability of AI Services."
“This resilience is occurring despite tariff uncertainty, supply-chain disruptions, & higher energy prices, w/ AI infrastructure spending, strong liquidity, & a stable but elevated fiscal deficit helping offset these headwinds,” adding that buybacks are on pace for another record year.
Despite the constructive target, the bank cautioned that "the path upwards will likely be non-linear."
JPM flagged extreme crowding in momentum factors, particularly in low-quality & speculative growth segments, as facing "a high probability of a flash-crash." Rapidly increasing equity supply & potentially tighter monetary policy could also constrain multiples.
On sector positioning, JPM remains overweight tech, AI upstream plays, defense & banks, while flagging growing value in healthcare. Energy, despite an +19% gain YTD, is seen as "ripe for profit taking."
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