AI investment and profit growth continue to support US stocks. HSBC raises its year-end target for the S&P 500 to 8,100 points.

HSBC's Global Investment Research team has raised its year-end 2026 target for the S&P 500 Index from 7,650 points to 8,100 points. HSBC stated that U.S. corporate earnings continue to exceed market expectations, and the robust earnings growth along with capital expenditure related to artificial intelligence is providing support for further increases in U.S. stocks. Currently, the S&P 500 Index hovers around 7,692 points, having risen approximately 11.8% this year. According to HSBC's new target of 8,100 points, there remains an upward potential of about 5.3% from the current level. Corporate earnings are the core reason for HSBC's upward revision of the target. The institution points out that the earnings per share (EPS) growth rate for S&P 500 constituents in the first half of 2026 is currently close to 40%, while the earnings growth rate for the second half is expected to remain above 25%, indicating strong momentum in corporate profit growth. HSBC forecasts that the overall profit of S&P 500 constituents will grow by about 33% in 2026, with earnings per share reaching $360. On this basis, HSBC assigns a valuation of approximately 22.5 times the price-to-earnings ratio to the S&P 500 Index, corresponding to the target of 8,100 points by the end of 2026. The institution notes that this valuation level is roughly in line with the longer-term average. The AI investment boom remains an important driver of corporate earnings growth. As large technology companies continue to increase capital expenditure on AI infrastructure, semiconductor manufacturers and a broader range of AI-related companies continue to benefit, becoming a significant force supporting the earnings growth of the S&P 500. At the same time, HSBC believes that the resilient macroeconomic environment in the U.S. and robust consumer demand will also provide support for S&P 500 constituents outside the AI sector, making this round of earnings growth not completely reliant on a few large technology companies. The strong performance during the second quarter earnings season further boosted HSBC's confidence in the earnings outlook for U.S. stocks. With numerous companies exceeding market expectations, analysts subsequently raised their earnings forecasts, and AI capital expenditures continue to rise, these factors collectively indicate that U.S. corporate earnings growth momentum is likely to continue for the remainder of the year. Given that the S&P 500 has already risen over 11% this year, HSBC's continued upward revision of the year-end target suggests that the institution believes there is still room for U.S. stocks to reach new highs. However, whether the market can continue to advance will rely more on the realization of corporate earnings compared to previous increases. According to HSBC's forecast, if the S&P 500 constituents' earnings per share can reach $360 in 2026 and maintain a valuation level of approximately 22.5 times, the S&P 500 Index is expected to rise to 8,100 points by year-end, reflecting an additional increase of about 5.3% from the current level. Continued outperformance in corporate earnings and AI capital expenditures will remain two core drivers propelling U.S. stocks higher.