JPMorgan strategists have raised their year-end target for the S&P 500 index, noting the benchmark is approaching their envisioned ideal scenario.

The year-end target for the S&P 500 has been increased from 7600 points to 7800 points.

The earnings per share (EPS) forecast for 2026 has been revised upward from $330 to $350.

Regarding the upcoming year, the strategists maintain a constructive outlook but project an EPS of $390, representing a 15% year-over-year increase. This figure is below the current consensus, reflecting potential risks associated with a weakening of AI-related pricing power.

The strategists, led by Dubravko Lakos-Bujas, stated they could have been "more optimistic" regarding earnings growth prospects.

The firm pointed out that consensus earnings growth expectations for the market this year have been revised upward to an average of approximately 20% over the next two years, aligning with a near-doubling trend in AI capital expenditure.

Despite raising his year-end target, Lakos-Bujas emphasized that the path upward is "likely to be non-linear as the market needs to overcome various hurdles."

He noted that consecutive strong earnings performances have elevated market expectations ahead of the Q2 earnings season, making it more challenging for companies to significantly surpass forecasts in both profits and capital expenditures.