Analysts Boost S&P 500 Year-End Goals in Tech and AI Surge

Published Date : 15-06-2025 

Wall Street strategists are becoming more bullish on US stocks, particularly the S&P 500, as the technology sector and artificial intelligence (AI) regain prominence. Keith Lerner, Truist co-chief investment officer and chief market strategist, explains the factors driving this optimism. 

Several Wall Street analysts are turning bullish on US stocks, boosting their year-end targets for the S&P 500. Keith Lerner, Truist co-chief investment officer and chief market strategist, joins Morning Brief to explain why he, too, has raised his S&P 500 year-end target. He notes that the technology sector and artificial intelligence (AI) are back in the forefront of investors' minds.

To understand the rationale behind this shift, it's important to look at the broader market context. Back in February, when the market was around all-time highs, Truist downgraded equities. As the market hit its lows, they advised clients to rebalance and consider upside risk. Initially, the rebound led them to take some profits, but their work suggested that recession risk was still relatively high.

However, the market has since reset, and the evidence now suggests a more neutral posture. The rebound off the lows is a positive sign, and the probability of a recession has decreased. Earnings forward estimates for the S&P 500 have also inflected higher, driven significantly by the tech and communications sectors. This shift has been influenced by the resurgence of technology and AI, which have been dominant themes in the bull market.

Keith Lerner emphasizes that the tech sector, particularly the S&P technology sector, has been relatively flat since last July. Nvidia, a key player in the tech sector, has also seen only modest gains during this period. This suggests that while there may be some short-term volatility, the underlying trend remains positive. He cautions that there could be some pain trades and suggests that investors should be prepared for bumps along the way, especially during the summer when liquidity is typically lower.

Lerner also discusses the market's reaction to the Federal Reserve's actions and the cooling of inflation. While tariffs and the Fed are still important factors, they are not the sole drivers of market sentiment. The market is now more balanced, with economic data, employment trends, and inflation all playing significant roles. The Fed's first rate cut is expected in September, and there is still a lot of time between now and then for various factors to influence the market.

In summary, the combination of a more resilient economy, positive earnings trends, and the resurgence of technology and AI has led many strategists to become more bullish on the S&P 500. While there may be short-term volatility, the long-term trend remains positive, and investors should stay aligned with their long-term equity allocations. 

Frequently Asked Questions (FAQS): 

Q: Why are Wall Street analysts becoming more bullish on the S&P 500?

A: Analysts are becoming more bullish due to a combination of factors, including a more resilient economy, positive earnings trends, and the resurgence of the technology sector and artificial intelligence (AI).

Q: What factors are driving the positive outlook for the tech sector?

A: The tech sector is being driven by strong earnings, particularly in the communications and AI segments, and a rebound in forward earnings estimates.

Q: How does the Federal Reserve's actions impact market sentiment?

A: While the Fed's actions are still important, they are not the sole drivers of market sentiment. Economic data, employment trends, and inflation are also significant factors influencing the market.

Q: What is the current outlook for the S&P 500 in the short term?

A: The short-term outlook for the S&P 500 includes potential volatility, especially during the summer months when liquidity is lower, but the long-term trend remains positive.

Q: What advice do strategists have for investors in this market environment?

A: Strategists advise investors to stay aligned with their long-term equity allocations and to be prepared for short-term volatility, especially during the summer months. 

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