The bank increased its year-end S&P 500 forecast to 7,800 while warning of sharp reversals in crowded AI trades.
JP Morgan lifted its S&P 500 year-end target to 7,800 from 7,600, citing a 20% upward revision in consensus earnings growth for the next two years. The bank also raised its 2026 EPS estimate to $350 and projected 2027 EPS at $390.
The upgrade follows a strong year-to-date rally but includes caution over speculative AI trades, which the bank warns could face a sudden correction. JP Morgan recommended a barbell strategy, balancing quality growth and direct AI exposure with low-volatility stocks.
Structural risks, including rising equity issuance and potential monetary tightening, were highlighted as constraints on further multiple expansion.