BY COMFORT OGBONNA
J.P. Morgan on Tuesday raised its year-end target for the S&P 500 index to 7,600, citing strong earnings momentum driven by artificial intelligence and the technology sector, even as it noted that geopolitical developments have added volatility to market sentiment.
The revised outlook marks a sharp reversal from just weeks earlier, when the bank had lowered its forecast to 7,200 from 7,500. At current levels, the new target implies an upside of roughly 6.9% from Monday’s close of 7,109.14.
Alongside the index revision, the bank also increased its earnings-per-share expectations for the S&P 500, raising its 2025 estimate to $330 from $315. It further lifted its 2027 forecast to $385 from $355, reflecting expectations that corporate profitability will continue to expand over the medium term, led by large-cap technology firms.
U.S. equities have recovered strongly from earlier lows in March, supported by easing geopolitical tensions following a ceasefire in the Middle East. The improvement in sentiment has helped push major indices, including the S&P 500 and Nasdaq, to record highs in recent weeks, as investors continue to price in robust corporate earnings growth.
J.P. Morgan noted, however, that the sharp rally could lead to short-term consolidation. The bank warned that while the geopolitical backdrop has improved, it remains unstable enough to create periods of hesitation in the market before the broader upward trend resumes.
The firm added that if geopolitical risks ease more decisively, particularly if tensions involving the United States and Iran are fully resolved, the S&P 500 could potentially approach 8,000 by year-end under a more bullish scenario.
A key driver of the rally continues to be the artificial intelligence sector, which has supported gains across major technology stocks. Investor enthusiasm around AI infrastructure, software development, and related semiconductor demand has played a central role in lifting market valuations.
J.P. Morgan highlighted renewed momentum in the AI trade, pointing to developments such as Anthropic’s latest model, “Claude Mythos,” which briefly boosted sentiment in the sector despite the company delaying its release over cybersecurity concerns. The episode underscored both the rapid pace of AI innovation and the technical risks still associated with advanced model deployment.
The bank also observed that recent upward revisions in earnings expectations have been relatively concentrated, primarily driven by a small group of technology companies and parts of the energy sector. This concentration, it noted, suggests that broader market participation in earnings growth remains uneven.
Despite ongoing debates about global portfolio diversification and potential capital flows away from U.S. assets, J.P. Morgan reiterated that American equities are expected to remain a core long-term holding for global investors. The firm cited the country’s continued leadership in innovation, stronger growth profile compared to peers, and sustained capital returns to shareholders as key structural advantages supporting that view.
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