Citi Raises S&P 500 Earnings Forecast to $365, AI as Key Variable for Hitting 8100 Points

In its latest report, Citi has raised its 2026 earnings per share (EPS) forecast for the S&P 500 from $350 to $365, while maintaining its year-end target of 8100 points. Citi believes that the second-quarter earnings reports indicate that U.S. stock revenues and profit margins still have room for growth, with corporate earnings resilience exceeding expectations. This assessment comes as U.S. stocks reach new highs. The U.S. Producer Price Index (PPI) for July was weaker than expected, easing market concerns over Federal Reserve policy pressures, allowing the S&P 500 to remain near historical highs. Citi points out that the market rally is not solely driven by valuation expansion; the upward revision of earnings provides new support for the index. AI remains a key variable in achieving the 8100-point target, with Citi emphasizing the significant contribution of AI-related industries to index earnings. If AI infrastructure, semiconductors, cloud services, and power supply chains continue to realize revenues, the market will be more accepting of high valuations. Additionally, Citi believes there is a foundation for the rally to continue spreading, as improvements in earnings across more industries will help U.S. stocks reduce their dependence on a few tech giants.

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