Bank of America Raises S&P 500 Target Amid AI Sector Improvements
Bank of America's US Equity and Quant Strategy team has raised its year-end 2026 target for the S&P 500 to 7,400 from 7,100 and set a 12-month goal at 7,800. The adjustment reflects stronger earnings growth forecasts—33% in 2026 and 12% in 2027—and improved sentiment toward the AI sector. The bank upgraded its stance on Communication Services to marketweight from underweight due to signs that cloud revenue at major hyperscalers like Alphabet, Meta, Microsoft, Amazon, and Oracle is beginning to outpace capital expenditure growth. However, BofA remains cautious about off-balance sheet commitments and potential risks posed by upcoming private-to-public company listings. The revised outlook suggests modest returns rather than a sharp rally in the near term. Investors holding S&P 500 index funds may see limited gains unless cloud revenue continues to accelerate at hyperscalers.
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Topics: AI stocks Bank of America Communication Services sector S&P 500