RBC Capital Markets raised its year-end target for the S&P 500 to 7,900 from 7,750 on Friday, citing resilient earnings growth and continued strength in artificial intelligence-linked sectors.
The Canadian brokerage’s new target implies a 7.7-per-cent upside from the benchmark index’s Thursday close of 7,335.66.
U.S. equities have rallied to hit record highs in recent weeks as enthusiasm around AI-related investment and expectations of solid profit growth continue to support investor appetite.
The S&P 500 posted its biggest monthly percentage gain since November 2020 last month.
RBC’s bullish stance follows similar moves by major Wall Street brokerages such as J.P. Morgan and Barclays, which raised their targets for the index last month, citing easing geopolitical risks and improving earnings momentum.
RBC said positive earnings revisions, driven by technology and AI-linked firms, alongside strong demand for AI infrastructure have supported valuations. It added that U.S. companies have remained resilient to higher costs and geopolitical risks, keeping leadership concentrated in large-cap growth stocks.
Strategists at RBC also said the rally has continued despite a challenging macro backdrop marked by sticky inflation, uncertainty over the timing of U.S. rate cuts, and lingering geopolitical risks.
Separately, among sectors, RBC downgraded U.S. healthcare stocks to “market weight” from “overweight” due to earnings revisions, fund outflows and policy uncertainty despite still-attractive valuations.