UBS lifts S&P 500 target to 8,100 as earnings upgrades broaden beyond AI Proactive uses images sourced from Shutterstock
UBS has raised its equity index targets across every major region after a stronger-than-expected results season, and now expects earnings at S&P 500 companies to grow 25% this year.
That is up from a previous forecast of around 20%. The Swiss bank’s chief investment office, which advises its global wealth management clients, has set a December 2026 target of 8,100 for the S&P 500 and 8,400 for June 2027.
Its eurozone earnings growth forecast has been lifted to around 15%, from around 10%.
Upgrades spread past the chip sector
Semiconductors, technology hardware and energy account for the bulk of the revisions, according to strategist Matthew Carter.
But the bank argues the improvement is wider than those three sectors. The median 2026 earnings estimate for S&P 500 constituents has risen since mid-May, and UBS expects every European sector to grow profits this year.
Global equities have absorbed concerns about geopolitics, AI disruption and recent volatility in long-dated government bonds without derailing, the note said.
AI still doing the heavy lifting
Artificial intelligence remains the foundation of the bank’s view. Demand for AI infrastructure continues to run ahead of supply on management’s own account, which UBS reads as evidence that capital spending on AI will keep growing into 2027.
Faster growth at cloud computing providers has also increased the bank’s confidence that companies are earning an acceptable return on money already spent.
UBS has upgraded Taiwanese equities and European information technology to attractive, its second-highest rating, citing renewed earnings momentum.
It cautions that selectivity within AI matters more after such a strong run.
Where else to look
The bank wants investors to diversify their sources of return as profit growth spreads beyond the largest technology names.
It points to industrials, financials, consumer discretionary and health care, alongside Europe, Japan, India, Asia excluding Japan, China and emerging markets more broadly.
The recommendation is framed as a response to rising corporate investment, improving financial activity and resilient consumer spending.
A hedge for the nervous
For clients who share the direction of travel but not the risk appetite, UBS is pushing structured products.
Capital preservation strategies, which cap losses at a set floor while retaining some participation in any rally, are presented as suitable for investors with concentrated portfolios or near-term liquidity needs.
These can be adjusted by duration, by the size of the loss floor and by the participation rate. UBS notes that investors using such strategies still carry issuer, liquidity, barrier and cost risks.