HSBC raised its 2026 year-end S&P 500 (SPX) price target to 7,650 from 7,500 on Monday, citing strong earnings growth and AI optimism and brushing aside fears of rising oil prices and geopolitical conflict. The firm expects the index to post EPS of $325 this year, implying growth of 20%.
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Limited Market Breadth Could Drive Upside Potential
Furthermore, the firm points out that breadth, or the number of stocks participating in the rally, has been weak. This could lead to additional gains if breadth strengthens. “Most stocks are still trading below their 52-week highs, suggesting scope for further upside if participation broadens,” said HSBC.
Improved efficiency from AI and falling long-term rates are also tailwinds for the market. At the same time, persistent inflation and weaker-than-expected earnings paired with high AI capital expenditures could stall performance.