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Citigroup raised its year-end forecast for the S&P 500 to 8,100 points by the end of 2026, becoming the latest major financial institution to adopt a more optimistic view of U.S. stocks, based on continued strong corporate earnings and the rising momentum of AI-related investments.
The new target reflects an increase from the previous estimate of 7,700 points, and also indicates the possibility of the index achieving additional gains of nearly 10% compared to recent closing levels, despite the volatility witnessed in the markets following the release of strong US jobs data last week.
This adjustment comes at a time when the S&P 500 index continues to perform strongly in 2026, having risen by about 8% since the beginning of the year, supported by broad gains in technology and artificial intelligence stocks that have become the main driver of the US markets.
Citigroup also raised its earnings forecast for companies listed on the index, predicting earnings per share of $350 in 2026, compared to a previous estimate of $320 set in December 2025. The firm went further, also providing an initial forecast for 2027 at $400 per share, reflecting growing confidence in the ability of US companies to continue achieving strong earnings growth.
Citigroup joins a growing wave of financial institutions that believe the current boom in artificial intelligence can offset the pressures from inflation and geopolitical risks associated with tensions in the Middle East, at least in the near term.
The institution explained that it has a high degree of confidence that American companies will continue to achieve results that exceed analysts’ expectations until the end of the year, which is one of the most important factors supporting stocks at the present stage.
But at the same time, Citigroup warned that the most important question is not about profit performance over the next two years, but rather about the sustainability of AI-driven growth beyond 2027. The institution believes that what is happening now is not like traditional economic cycles, but rather more like an exceptionally large investment cycle in capital spending on AI infrastructure.
According to this view, technology, cloud computing, and data center companies are currently spending enormous sums to build the infrastructure needed for the next generation of artificial intelligence applications, which is supporting revenues and profits in the short term. However, the sustainability of this high level of spending over the years remains questionable.
Citigroup strategists believe that the benefits of artificial intelligence will gradually expand to include many sectors outside of technology companies, but markets will begin in the future to focus on a more important question: Will American companies actually succeed in achieving tangible productivity gains from artificial intelligence that justify these huge investments?
The organization notes that after 2027, spending on artificial intelligence may begin to gradually slow down, which could create pressure on stock markets if companies are unable to compensate for this through real and sustainable growth in profits and productivity.
Despite these long-term warnings, Citigroup confirms that this scenario is still far from the concerns of investors at present, as markets remain focused on the strength of earnings and the continued strong demand for artificial intelligence technologies, the two factors that are driving financial institutions to continuously raise their targets for US stock indices during the current period.
