HSBC raised its 2026 year-end S&P 500 target to 8,100 from 7,650, implying roughly 4.9% upside from the index’s last close. The bank cited stronger-than-expected corporate earnings as the main driver, with first-half 2026 earnings-per-share growth near 40% and second-half growth expected above 25%.
HSBC strategist Nicole Inui said the bank forecasts full-year 2026 earnings growth of 33%, or about $360 per share, applying a price-to-earnings multiple of 22.5 times. LSEG data shows 86% of 492 S&P 500 companies beat analyst estimates, far above the long-term average beat rate of 67.5%.
AI capital spending remains a key catalyst, supporting semiconductor and AI-linked stocks. However, the earnings strength extends beyond operating results. Alphabet reported a $98 billion gain, while Amazon recorded $53.4 billion in non-operating pre-tax income tied to its Anthropic investments. FactSet noted those two companies were largely responsible for the unusually large S&P 500 earnings surprise. Even excluding major AI investment gains, S&P 500 earnings rose about 33%, the strongest underlying growth since 2021, according to Reuters analysis.
Nvidia underscored AI infrastructure demand with quarterly revenue of $96.2 billion, more than double the year-earlier level. Technology earnings jumped 74%, while energy also posted exceptionally strong growth.
Other banks are also lifting forecasts. Barclays raised its S&P 500 target to 7,950 from 7,800 and increased its 2026 EPS forecast to $365, while Goldman Sachs, Morgan Stanley and Citigroup expect the index to finish at or above 8,000.
HSBC played down concerns about Federal Reserve rate hikes, geopolitical uncertainty, U.S. midterm elections and liquidity needs. The bank expects the Fed to hold rates steady this year and next, and sees the 10-year Treasury yield ending 2026 at 4.65%. It did flag potential near-term volatility from seasonal September weakness, upcoming inflation data and regulatory pressure on data centers and social media.
