JPMorgan experts raised the target level of the S&P 500 index for the end of 2026 from 7200 to 7600 points, which implies growth of about 7% to the current value.
This decision crosses the previous JPMorgan downgrade, caused by the oil crisis due to the war with Iran, and concerns about overconfidence of investors in the absence of serious consequences of the conflict. JPMorgan raised its outlook based on the rapid development of the artificial intelligence market and optimistic expectations for first-quarter earnings.
“Markets made new highs last week on the back of geopolitical détente and strong growth in the artificial intelligence sector. Mag-7 companies and oil companies posted similar results,” the analysts said.
Wall Street is once again gripped by interest in the AI sector
PMorgan reports that investor demand for AI stocks has peaked since the start of 2025, helping to set new all-time highs.
According to the bank’s analysts, in addition to reduced geopolitical tensions, the emergence of the “Anthropic Myth” article was an important factor. As a result, 66% of AI companies in the S&P 500 Index have shown significant growth since April 7, indicating the rapid development of AI-based models and services.
Anthropic’s value has soared to $800 billion. This week, Amazon announced a new $25 billion investment in the company, adding significantly to its existing multi-billion dollar investment in chatbot developer Claude AI.
JPMorgan also noted that revenue for AI startups has tripled since the beginning of the year, and OpenAI is expected to show similar gains. The company’s new model is expected to be released soon.
Analysts have also allayed AI-related fears that have previously led to sell-offs in tech stocks. They argue that the risk of job cuts in some industries, such as software development, is not yet an issue as companies continue to recruit.
Profits could rise
Experts at JPMorgan forecast improved financial performance in the first quarter, thanks in part to reduced worries about artificial intelligence.
“We expect a more positive reporting period for the first quarter compared to the past, when investors were tired of AI and feared rising capital expenditures and research and development costs,” the analysts said.
Experts also pointed out that consensus earnings forecasts for companies in the S&P 500 index may continue to rise, as recent positive developments have been associated with only a few stocks.
Geopolitical risks remain
A peace agreement between the U.S., Israel and Iran has yet to be reached, but the market has already reacted to the temporary ceasefire that expires Wednesday evening.
JPMorgan emphasized that geopolitical risks remain and could cause a short-term decline, although the company remains generally optimistic about equities.
“The sharp rise from recent lows (10-day RSI > 95th percentile) and the volatile geopolitical environment pose a risk of short-term market consolidation before resuming the uptrend,” the analysts pointed out.
They also noted that a full resolution of the conflict in the Middle East may take time, but current oil prices near $90 indicate that the market does not expect further escalation.
Prepared based on materials from Business Insider
