Citi: Raises S&P 500 Earnings Forecast, AI Remains Key Variable in Reaching 8100 Points

August 14th, Citigroup continued to be bullish on the US stock earnings cycle in its latest report. Led by Scott Chronert, Citigroup's stock strategy team raised the 2026 S&P 500 EPS forecast from $350 to $365 while maintaining the year-end target of 8100 points. Citigroup believes that the second-quarter earnings reports show that US stock revenue and profit margins still have room to grow, and corporate earnings resilience is stronger than previously expected.

This assessment comes as US stocks hit new highs again. After the US July PPI came in weaker than expected, market concerns about Federal Reserve policy pressure eased, and the S&P 500 continued to hover near historic highs. Citigroup believes that the market rally is not solely driven by valuation expansion, as earnings upgrades are providing new support for the index.

However, AI remains a key variable in reaching the 8100-point target. Citigroup stated that AI-related industries still play a significant role in index earnings contribution, and if AI infrastructure, semiconductors, cloud services, and the power chain continue to deliver revenue, the market will more easily accept high valuations. At the same time, the bank also emphasized that the market rally has a foundation for further diffusion, and more industry profit improvements will help US stocks break away from relying solely on a few tech giants.