Earnings growth driven by the artificial intelligence buildout will lead the S & P 500 to cross the 8,000 mark in 2026, according to Citi. The bank raised its year-end target for the broad index to 8,100 in a Friday note. That's a more than 9.5% gain from Friday's close. Citi's previous target for the S & P was 7,700. Strategist Scott Chronert now projects earnings of $350 per share for the S & P in 2026, with that number rising to $400 in 2027. "AI tailwinds are fueling an episodic fundamental surge across related sectors," Chronert wrote in the note. "We have high confidence in continued earnings beats through year-end." .SPX YTD mountain S & P 500 year-to-date. He noted that positive surprises on earnings in the first quarter were unusually high . Chronert doesn't expect that level of beats to continue, but he still forecasts a larger-than-normal positive surprise rate in the coming quarters' financial reports. Chronert also said that earnings will surpass valuation expansion as the driver of the index. He added that while volatility will likely appear through events like the U.S.-Iran war , inflation heating up and questions over the future path of interest rates , AI spending is the focus for investors. While investors are nervous about an AI bubble, Chronert thinks the market isn't anywhere near done with obsessing over the technology's growth. "We presume that fundamentals and related price action tell us we're in middle innings," he wrote. "In turn, both trailing and forward PEs should be expected to moderate going forward, thus increasing the burden on earnings growth and related expectation to drive index price action."
<small>Source: CNBC</small>
