Sept 9 (Reuters) - Barclays raised its year-end target for the benchmark S&P 500 index (.SPX), to 7,950 from 7,800 on Wednesday, following a standout earnings season led by technology companies.
The revised target is about 3.6% higher than the index's last close. The brokerage sees the benchmark reaching 8,800 points by the end of 2027.
U.S. corporate earnings have outperformed Wall Street expectations in the second quarter; 86% of the 492 S&P 500 companies that have reported results exceeded analysts' estimates, higher than the long-term average of 67.5%, according to data compiled by LSEG.
Barclays said AI investment and healthy economic activity should support earnings momentum in the coming quarters.
But the brokerage said it remains conservative on valuations because of doubts over the durability of the AI spending, resilient inflation, geopolitical uncertainty and a more hawkish rate outlook. The benchmark index has risen 12.1% this year despite the concerns.
The brokerage also lifted its 2026 earnings-per-share forecast for the S&P 500 to $365 from $337.
It downgraded the utilities sector to "neutral" from "positive," citing regulatory uncertainties, including challenges around wildfire liability reform and growing opposition to data center permitting in some U.S. states.
On Tuesday, HSBC also raised its year-end target, betting that strong corporate earnings and sustained spending on AI infrastructure will extend the benchmark index's rally.
Expectations for the index remain bullish, with UBS Global Research, Goldman Sachs and Citigroup projecting the S&P 500 will end the year at or above 8,000.
Reporting by Akriti Shah in Bengaluru; Editing by Sahal Muhammed
