Citi sets 2026 S&P 500 target at 7,700, expects AI to remain key theme

Dec 15 (Reuters) - Citigroup (C) has acceptable a year-end people of 7,700 for the S&P 500 scale for 2026, pointing to robust firm ​earnings and sustained tailwinds from artificial quality investments.

The brokerage said successful ‌a enactment connected Friday that it expects AI infrastructure build-out to beryllium a cardinal taxable successful ‌2026, echoing Wall Street peers, but predicts the absorption volition displacement from companies that alteration AI to those that follow the nascent technology.

"While the AI accent is expected to beryllium persistent, the improvement volition apt travel a perceived victor ⁠versus loser dynamic," strategists astatine ‌Citi said.

Citi's people implies a 12.7% summation from the benchmark's past adjacent of 6827.41 points. The brokerage estimates net per ‍share for the scale to scope $320 by the extremity of adjacent year, higher than statement estimates of astir $310.

The widely-tracked scale has gained astir 16% this year, spurred broadly ​by capitalist optimism astir AI, robust firm profits and expectations of falling ‌interest rates, contempt fears of a marketplace bubble and precocious exertion valuations.

"To beryllium clear, a precocious valuation starting constituent is simply a hurdle for the market, but not an insurmountable one. Rather, it puts expanding unit connected fundamentals to enactment the terms action," Citi said.

As the existent bull marketplace enters its 4th ⁠year, bouts of volatility should beryllium expected ​and whitethorn beryllium much acute fixed implicit maturation ​expectations, the brokerage added.

Citi expects the scale to deed 8,300 successful a bull-case scenario, and driblet to 5,700 successful the carnivore ‍case.

The brokerage's year-end ⁠index people compares with Oppenheimer Asset Management's Street-high forecast of 8,100 and a Reuters canvass successful November that forecast the scale would emergence astir ⁠12% by the extremity of adjacent year.

In November, UBS Global Wealth Management had besides forecast ‌a year-end people of 7,700 for the index.

(Reporting by Joel Jose ‌in Bengaluru; Editing by Sahal Muhammed)