JPMorgan lifts S&P 500 target to 8,000 on earnings strength and AI monetisation
A revision from 7,800 reflects JPMorgan’s view that artificial intelligence spending is beginning to yield tangible revenue growth, supporting a bullish outlook despite recent market turbulence.
JPMorgan strategist Dubravko Lakos-Bujas has raised his price target for the S&P 500 index to 8,000, up from 7,800, citing robust corporate earnings and emerging signs of artificial intelligence monetisation. The revision follows a reporting period where the majority of index constituents have demonstrated financial resilience, reinforcing the bank’s positive stance on US equities.
According to Lakos-Bujas, the earnings landscape remains strong and broad-based across multiple sectors. With 87% of S&P 500 companies having reported results, 78% have beaten earnings estimates and 73% have surpassed revenue forecasts. Approximately 61% of firms have delivered double beats, exceeding both sales and net income expectations, while only 10% have missed both metrics. Earnings per share revisions have also trended higher since the start of the earnings season.
The strategist highlighted that the key theme for the quarter has been a sharper focus on evidence of monetisation and return on invested capital among hyperscalers. Lakos-Bujas noted that signs of this trend playing out were most evident in the second quarter across Google, Amazon, and Microsoft. These firms have shown stronger cloud growth, backlog expansion, and improved visibility in operating cash flow, meeting high investor expectations.
Although free cash flow is projected to remain negative for most hyperscalers in fiscal year 2027, demand indicators are improving relative to capital expenditure. Rising backlog-to-capex and book-to-bill ratios suggest that monetisation may be ramping faster than spending, which should support stronger future revenue growth and alleviate concerns regarding return on invested capital.
Truist chief markets strategist Keith Lerner echoed the sentiment, stating that the weight of the evidence continues to support giving the bull market the benefit of the doubt. Despite a turbulent summer for the stock market, the latest earnings season and third-quarter outlooks have proven resilient, with stocks hitting record highs as corporate performance counters bearish narratives.
