AI investment and profit growth continue to support the US stock market, HSBC raises S&P 500 year-end target to 8100 points

The S&P 500 Index is currently hovering around 7,692 points, with a cumulative rise of about 11.8% so far this year. According to HSBC’s latest target of 8,100 points, the S&P 500 Index still has about 5.3% upside from current levels.

Corporate earnings are the core reason HSBC has raised its 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 in the second half, profit growth is still expected to exceed 25%, indicating that the momentum in corporate profit growth remains robust.

HSBC expects that earnings for S&P 500 constituents will grow by about 33% for the full year 2026, with EPS reaching 360 USD. Based on this, HSBC gives the S&P 500 Index a valuation of about 22.5 times earnings, which corresponds to the 8,100-point target for the end of 2026. The institution notes that this valuation is roughly in line with the longer-term average level.

The artificial intelligence investment boom remains an important driver for corporate earnings growth. As large technology companies continue to increase capital expenditures on AI infrastructure, semiconductor manufacturers and the broader AI-related sector continue to benefit, serving as a key force supporting S&P 500 earnings growth.

Meanwhile, HSBC believes that the resilient US macroeconomic environment and steady consumer demand will also support S&P 500 constituents outside the AI sector, ensuring this round of earnings growth is not entirely dependent on a few large tech companies.

The strong performance during this year's second-quarter earnings season has further strengthened HSBC’s confidence in the earnings outlook for US equities. A large number of companies exceeded market expectations, analysts have subsequently raised earnings forecasts broadly, and AI capital expenditures continue to increase. These factors collectively indicate that US corporate earnings growth momentum is expected to continue for the remainder of this year.

With the S&P 500 already up more than 11% this year, HSBC’s further increase of its year-end target means the institution believes there is still room for US equities to reach new highs. However, compared to previous gains, the ability of the market to continue rising will increasingly depend on actual corporate earnings delivery.

According to HSBC’s forecasts, if S&P 500 constituents’ EPS reaches 360 USD in 2026 and the valuation remains around 22.5 times earnings, the S&P 500 Index could rise to 8,100 points by the end of the year, up about 5.3% from current levels. Ongoing outperformance in corporate earnings and AI capital expenditure will remain the two core drivers pushing US equities even higher.