JPMorgan lifts S&P 500 target to 8,000 on strong earnings

JPMorgan has increased its S&P 500 target to 8,000, up from 7,800. This upward revision is attributed to a robust earnings season spanning multiple sectors and growing signs of AI spending monetization. Dubravko Lakos-Bujas, the strategist leading the initiative, noted that earnings have remained strong and broad across the board.

The bank has also upgraded its 2026 earnings per share (EPS) estimate to $365, projecting a 35% year-over-year growth, surpassing the consensus estimate of $358. Similarly, the 2027 EPS estimate has been raised to $420, indicating a 15% increase. The analysts also highlighted that private company valuations are contributing an extra $18 to EPS, based on first-half 2026 data.

However, JPMorgan has maintained its forward multiple at approximately 20 times, citing factors like higher-for-longer interest rates, geopolitical uncertainties, and substantial equity and debt supply still needing absorption. The key theme for the earnings season is seen as hyperscaler capital spending, with a focus on monetization and return on invested capital.

Strong evidence for this trend is evident in the performance of Amazon, Google, and Microsoft, with notable growth in cloud services and backlog expansion. Despite this positive outlook, free cash flow remains a concern, as hyperscaler trailing-twelve-month net income is significantly higher than free cash flow, indicating a $430 billion gap. The analysts project negative free cash flow for most of the S&P 500 group through 2026-2027.