Barclays lifts S&P 500 target to 7,950, sees 4% gain on tech strength

On Wednesday, Barclays increased its year-end S&P 500 forecast to 7,950 from 7,800, implying roughly 4% upside from the index's most recent closing level.

The bank attributed the move to sustained demand for artificial intelligence (AI) and consistent beat-and-raise results from major technology companies, which have preserved earnings momentum.

The Earnings Math Behind the New S&P 500 Target

Venu Krishna, head of US equity strategy at Barclays, raised the firm’s 2026 earnings estimate to $365 per share from $337. The 2027 forecast was increased to $414 from $389, while the 2027 index target remained at 8,800.

In the second quarter, Big Tech earnings rose 35% from a year earlier, accelerating from 30% in the prior period. Earnings for the rest of the technology sector surged 88%.

Corporate earnings have also consistently surpassed Wall Street projections. LSEG data indicated that 86% of the 492 S&P 500 companies that reported exceeded analyst forecasts. That proportion is well above the historical average of 67.5%.

“Tech continues to deliver standout beat-to-miss ratios, with healthcare and energy also showing strength, while Real Estate and Utilities lagged,” the note read.

Krishna anticipates that hyperscaler capital spending will exceed $1.1 trillion in 2027, representing a 67% increase over the prior year.

“Growth is expected to moderate in 2028, though spending is still projected to rise by approximately 30%. Google and Amazon are expected to be the largest contributors, with Meta close behind,” the analyst added. 

Other major financial institutions have also boosted their year-end projections for the benchmark index. JPMorgan increased its year-end target to 8,000 on Monday. Additionally, research firm CFRA now forecasts the index will reach 8,050.

HSBC raised its S&P 500 target to 8,100 from 7,650 on Tuesday. The bank pointed to robust earnings and ongoing AI infrastructure investment as drivers.

Everything Outside AI Starts to Catch Up

That concentration is a double-edged sword. AI stocks accounted for approximately 45% of the S&P 500’s market capitalization and were responsible for nearly the entire rally.

The divergence is visible in market data. The S&P 500 closed at 7,636.36 on September 9, marking an 11.55% gain for the year.

The US 500 Excluding Artificial Intelligence Enablers Price Return Index (SPXXAI) stood at 3,197.09, a 4.48% year-to-date increase. BeInCrypto previously reported that the gauge had fallen below its February launch level while the headline index climbed.

Stocks outside the AI trade have therefore turned positive. However, they still lag the broader benchmark by roughly seven percentage points.

Barclays remained cautious on valuations, citing doubts about the durability of AI spending, persistent inflation, geopolitical risks, and a more hawkish interest rate path. Strategists have identified 2027 as the year the thesis will be put to the test.

Whether the 7,950 level is reached depends less on the broad market than on whether the hyperscalers continue issuing the checks.