Barclays, Stifel lift S&P 500 target to 7,800 on strong earnings outlook

Barclays and Stifel raised their year-end target for the S&P 500 index to 7,800, citing strength in corporate earnings and optimism around AI, despite inflation and rate hike concerns.

​Barclays and Stifel raised their year-end targets ​for the S&P 500 ‌index to ​7,800 on Tuesday, citing strength in corporate earnings.

The target is about 4.4% higher than the index's last close of ‌7,472.79. "The equity bull case remains intact, but earnings and AI capex visibility must do more of the work as Fed support fades," Barclays analysts led by Venu Krishna ‌said in a note.

The S&P 500 is up 9.2% so far this ‌year, broadly driven by AI optimism, while the U.S.-Iran peace deal has also boosted investor sentiment. The revised targets add to a growing wave of bullish calls from brokerages, with some expecting the index to ⁠cross ​the 8,000 mark.

However, rising ⁠inflation concerns and a strong labor market have triggered fears of rate hikes by the U.S. ⁠Federal Reserve that could potential dent equity performance. Apart from potential higher borrowing costs, concerns around massive AI ​budgets and consumer spending also linger, Barclays said, as it maintained its "negative" ⁠stance on the consumer space. Barclays also lifted its S&P 500 earnings-per-share forecast to $337 from $321 for 2026 and also ⁠set ​a 2027 index target of 8,800.

The brokerage said improving visibility around the technology earnings outlook and a firmer industrial backdrop were helping offset concerns around consumer spending. "The ⁠rebound in equities following the U.S.–Iran détente reinforces the market’s resilience, but we believe ⁠yields are re-centering as ⁠a key risk factor for equities," Barclays said.

Barclays also changed its U.S. sector views, downgrading financials to "neutral" and upgrading healthcare ‌to "neutral".