Barclays lifts S&P 500 year-end target to 7,950

Barclays raised its year-end S&P 500 target to 7,950 from 7,800 on Wednesday after updating its profit forecasts and outlook for corporate spending. The revision leaves roughly 4% upside from the index’s latest close.

Venu Krishna, head of US equity strategy at Barclays, increased the firm’s 2026 earnings estimate to $365 per share from $337 and raised the 2027 forecast to $414 from $389. Barclays kept a longer-term 2027 index target of 8,800.

Barclays pointed to continued demand for artificial intelligence and repeated beat-and-raise results from the largest technology companies as drivers of the change. The bank’s note cited second-quarter results showing the largest tech firms’ earnings up about 35% year over year, while the rest of the technology sector saw an 88% increase.

Data from LSEG referenced by Barclays showed 86% of the 492 S&P 500 companies that reported so far exceeded analysts’ estimates, above a long-run average of about 67.5%. The bank’s note added that technology, healthcare and energy posted stronger beat-to-miss ratios, while real estate and utilities lagged.

Barclays projects hyperscaler capital spending to top $1.1 trillion in 2027, a roughly 67% increase from 2026, and expects spending to rise about 30% in 2028 as growth moderates. Google, Amazon and Meta are forecast to be the largest contributors to that investment cycle, according to Barclays’ analysis. The note read, “Tech continues to deliver standout beat-to-miss ratios, with healthcare and energy also showing strength.”

Other major banks and research firms have raised year-end targets this week: JPMorgan to 8,000, CFRA to 8,050 and HSBC to 8,100 from 7,650, citing strong corporate earnings and AI infrastructure spending.

Barclays kept valuation assumptions cautious and flagged risks including uncertainty about the durability of AI spending, persistent inflationary pressures, geopolitical tensions and a potentially more hawkish interest-rate path. Strategists identified 2027 as the year the investment case for AI-driven growth will be tested.

The recent market advance has been concentrated in AI-related names, which accounted for about 45% of the S&P 500’s market capitalization and drove much of the rally. The S&P 500 closed at 7,636.36 on Sept. 9, up about 11.6% year to date. An index excluding AI enablers has gained roughly 4.5% over the same period, trailing the broader benchmark by about seven percentage points.

Barclays said whether the 7,950 target is reached depends in large part on whether hyperscalers maintain elevated capital spending and whether corporate earnings continue to outpace expectations.