Wall Street Pros Maintain Bullish S&P 500 Forecasts As Earning Growth Hits 27.7%

The blue-chip S&P 500 Index jumped to a record high of $7,513 this month before pulling back to $7,408 on Friday. It has jumped by 7.7% this year and 26% in the last 12 months. Still, Wall Street analysts have maintained their bullish forecasts, which are backed by the soaring corporate earnings.

Analysts Are Bullish On The S&P 500 Index Despite Risks

Most Wall Street analysts are still highly bullish on the S&P 500 Index despite the rising risks. The most notable ones is the ongoing US-Iran war, with President Donald Trump declaring the ceasefire being on life support.

This war has pushed US inflation to the highest point in years. As a result, government bonds have continued rising, with the 30-year crossing the 5% milestone. The benchmark ten-year has jumped to 4.5%.

Analysts believe that the US stocks will defy these risks and continue rising in the coming months. Yardeni Research predicts that the S&P 500 Index will jump to $8,200, while Oppenheimer sees it hitting $8,100.

Deutsche Bank and Capital Economics predict that it will jump to $8,000, while Morgan Stanley and Wells Fargo have a target of $7,800. Other bullish analysts are from companies like Evercore, RBC, and Citigroup.

Companies Have Reported Strong Financial Results

The most bullish catalyst for the S&P 500 Index is the soaring corporate earnings, which have been boosted by the AI boom. A FactSet Research report notes that 91% of all companies in the S&P 500 Index have published their earnings. 

The average earnings growth is 27.7%, the highest figure since Q4'21. It is also the seventh consecutive quarter in which companies have recorded a double-digit earnings growth. 

Most sectors have recorded strong financial results. Banks like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) had strong results, helped by their trading businesses, which benefited from the Iran war's volatility. 

Technology companies like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG) benefited from the rising demand for their solutions and their AI investments. Energy companies are benefiting from the elevated oil and gas prices.

Analysts also note that the S&P 500 is not particularly expensive. The most cited metric is the forward price-to-earnings ratio, which currently stands at 21.4 — in line with historical averages, even as companies continue to report strong earnings.

As a result, a combination of cheaper valuation, strong earnings, tariff refunds, and Big Beautiful Bill tax cuts may help to fuel the stock market rally this year.

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