Strong first-quarter earnings growth is giving the S&P 500 more room to run, prompting analysts to raise their year-end price targets.
This trend suggests that corporate profitability is keeping pace with high equity valuations, potentially sustaining a bull market despite global risk concerns.
Data from the first quarter of 2026 shows S&P 500 profits rose 28.2% year-on-year [1]. This growth was driven by resilient spending on artificial intelligence and corporate profits that beat previous forecasts [3, 5].
The earnings season was one of the strongest in two decades. Approximately 84% of S&P 500 companies beat earnings estimates [2], while 81% of companies beat revenue estimates [2] during the first quarter.
Strategists at UBS and CIBC, along with analysts at HSBC, have responded to these figures by adjusting their outlooks [1, 2]. HSBC said it raised its year-end target for the S&P 500 to 7,650 points [4].
Analysts said the combination of strong earnings and AI-driven demand provides a fundamental floor for the market. This support allows the index to maintain its upward trajectory even as investors weigh broader economic risks.
“S&P 500 profits were up 28.2% year-on-year in Q1 2026”
The alignment of high revenue beats and profit growth indicates that the current market rally is backed by actual corporate performance rather than speculative momentum alone. By raising targets, major financial institutions are signaling that the 'AI trade' is translating into tangible balance sheet gains, which may reduce the risk of a sharp valuation correction in the near term.
