Barclays Sees 4% Upside for the S&P 500 on Tech Earnings Strength

Barclays raised its year-end S&P 500 target to 7,950 from 7,800 on Wednesday, leaving roughly 4% upside from the index’s latest close.

The bank pointed to durable demand for artificial intelligence (AI) and repeated beat-and-raise results from Big Tech, which kept earnings momentum intact.

The Earnings Math Behind the New S&P 500 Target

Venu Krishna, head of US equity strategy at Barclays, lifted the firm’s 2026 earnings estimate to $365 per share from $337. The 2027 forecast moved to $414 from $389, while the 2027 index target stayed at 8,800.

Big Tech earnings grew 35% from a year earlier in the second quarter, up from 30% in the prior period. Earnings across the rest of the technology sector jumped 88%.

Corporate earnings have also continued to beat Wall Street expectations. LSEG data showed that 86% of the 492 S&P 500 companies that reported exceeded analyst estimates. That figure stands well above the long-term average of 67.5%.

“Tech continues to deliver standout beat-to-miss ratios, with healthcare and energy also showing strength, while Real Estate and Utilities lagged,” the note read.

Krishna expects hyperscaler capital spending to pass $1.1 trillion in 2027, a 67% increase from the prior year.

“Growth is expected to moderate in 2028, though spending is still projected to rise by approximately 30%. Google and Amazon are expected to be the largest contributors, with Meta close behind,” the analyst added. 

Other major banks have also raised their year-end forecasts for the benchmark index. JPMorgan raised its year-end target to 8,000 on Monday. Furthermore, research firm CFRA now expects the index to reach 8,050.

HSBC lifted its S&P 500 target to 8,100 from 7,650 on Tuesday. The bank cited strong earnings and continued AI infrastructure spending.

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Everything Outside AI Starts to Catch Up

That concentration cuts both ways. AI stocks accounted for about 45% of the S&P 500’s market capitalization and drove nearly all of the rally.

The gap shows up in the tape. The S&P 500 closed at 7,636.36 on September 9, up 11.55% for the year.

S&P 500 Year-to-Date Performance. Source: Google Finance

The US 500 Excluding Artificial Intelligence Enablers Price Return Index (SPXXAI) sits at 3,197.09, a 4.48% year-to-date gain. BeInCrypto previously reported that the gauge had slipped below its February launch level while the headline index climbed.

US 500 Excluding Artificial Intelligence Enablers Price Return Index Year-to-Date Performance Source: Google Finance

Stocks outside the AI trade have therefore turned positive. However, they still trail the broader benchmark by roughly seven percentage points.

Barclays stayed conservative on valuations, citing doubts over how durable AI spending will prove, sticky inflation, geopolitical uncertainty, and a more hawkish rate path. Strategists have flagged 2027 as the year the bet will be tested.

Whether 7,950 arrives has less to do with the broad market than with whether the hyperscalers keep writing the checks.

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