JPMorgan just boosted its S&P 500 target on fresh AI excitement and big earnings expectations
NYSE
- JPMorgan boosted its 2026 stock market price target, reversing its prior Iran-war downgrade.
- Analysts said Anthropic's new model has reinvigorated the AI trade.
- Expected first-quarter earnings strength will also boost stocks, JPMorgan said.
JPMorgan analysts raised their S&P 500 price target for the year, signaling that AI momentum and bullish earnings expectations should offset the drag from the Iran war.
The analysts boosted the bank's 2026 year-end S&P 500 target to 7,600 from 7,200, indicating potential upside of about 7% from current levels.
The call reverses JPMorgan's prior downgrade on the Iran war oil shock and concerns about investor complacency regarding the impacts of the conflict. JPMorgan cited strong AI momentum and bullish expectations for the first-quarter earnings as factors that sparked its latest upgrade.
"Markets broke out to new highs last week, led by geopolitical de-escalation and strong momentum in the AI theme, with Mag-7 and AI upstream names outperforming in unison," they wrote.
The S&P 500 erased Iran-war losses and climbed to fresh record highs as investors repriced the prospect of de-escalation in Iran. The tech-heavy Nasdaq also hit new records, with the Magnificent Seven seeing strong gains.
AI hype returns to Wall Street
JPMorgan said that investor interest in AI stocks hasn't been this high since the first half of 2025 and is fueling record highs.
"Other than the geopolitical de-escalation, we believe the Anthropic Mythos headline was the key catalyst, with 66% of S&P 500 AI names outperforming since April 7th — evidence of rapidly improving models and AI services," the note read.
Anthropic's valuation has surged to $800 billion. This week, Amazon announced a $25 billion investment in the company, adding to its already multi-billion dollar investment in the maker of the Claude AI chatbot.
JPMorgan said that the AI startup's revenue run rate has tripled year-to-date and that OpenAI is expected to follow suit with improved performance with an updated model release anticipated soon.
The analysts addressed the AI fears that fueled a tech stock sell-off earlier in the year, saying that "Even the risk of AI induced job displacement in some of the most sensitive areas (i.e., software engineering) is being put to rest for now as hiring is resuming."
More earnings upside to come
JPMorgan analysts expect a bullish first-quarter earnings season, in part because AI fears have faded.
"Looking ahead, we expect a more favorable 1Q reporting season than last quarter, when investors were AI-fatigued and weary of higher Capex and R&D spending," they wrote.
The analysts added that they believe that consensus S&P 500 earnings estimates have room for more upside, given that recent positive revisions have been driven by only a few stocks.
Geopolitical risk lingers
There is yet to be a permanent peace deal between the US, Israel, and Iran, but the market has priced in de-escalation due to the temporary ceasefire that is set to expire on Wednesday evening.
JPMorgan warned that geopolitical risks persist and could fuel a short-term downturn, though the firm is broadly still bullish on stocks.
"Given the sharp rally from recent lows (10-day RSI >95th %ile) and a geopolitical backdrop that, while significantly de-escalated, remains in flux, there is a meaningful risk that the market enters a short-term consolidation phase before resuming its upward trajectory," the analysts outlined.
They added that a complete resolution to the conflict in the Middle East will likely take time, but oil prices around $90 signal the market doesn't anticipate further escalation.