Barclays has raised its 2026 year-end S&P 500 target to 7,950 from 7,800, citing stronger corporate earnings and continued momentum in the technology sector.
The bank maintained its 2027 S&P 500 target at 8,800, while also upgrading its earnings forecasts for both years.
Barclays Raises S&P 500 Earnings Forecasts
Barclays increased its fiscal 2026 earnings-per-share estimate to $365 from $337.
For fiscal 2027, the bank lifted its EPS forecast to $414 from $389.
Its base-case scenario now assumes approximately 30.8% EPS growth in 2026, together with a price-to-earnings multiple of 21.8 times.
The revised outlook reflects a stronger-than-expected second-quarter earnings season, particularly among major technology companies.
S&P 500 Earnings Growth Surges
S&P 500 headline earnings per share increased by more than 50% year over year during the quarter.
Excluding one-time items, EPS growth reached approximately 29.3%, while overall sales increased 13.3%.
Large technology companies were among the strongest contributors.
Big Tech delivered around 35% EPS growth, improving from 30% in the previous quarter. Meanwhile, the remainder of the technology sector recorded an even stronger 88% earnings increase.
Most S&P 500 Companies Beat Expectations
Barclays strategists led by Venu Krishna highlighted the broad strength of the earnings season.
Around 86.2% of S&P 500 companies exceeded consensus forecasts, comfortably above the long-term median of approximately 75% recorded since 1998.
However, investors remained demanding.
Barclays noted that stocks which missed expectations were punished considerably more than companies that beat forecasts were rewarded.
The strategists linked this reaction to a high market hurdle rate, particularly as bond yields remain elevated and continue to rise.
Alphabet and Amazon Lead Big Tech Strength
Within the largest technology companies, Alphabet and Amazon generated much of the positive earnings surprise.
Meta, by contrast, came in below expectations.
Barclays also expects capital expenditure among major hyperscale technology companies to exceed $1.1 trillion in 2027.
That would represent a roughly 67% year-over-year increase.
Alphabet and Amazon are expected to be the largest contributors to that spending, with Meta also accounting for a significant share.
Earnings Drive Barclays’ Higher S&P 500 Target
Despite the improved earnings outlook, Barclays said its valuation assumptions remain intentionally cautious.
Its sum-of-the-parts valuation framework assigns a 23.0x multiple to Big Tech, a 22.0x multiple to the rest of the technology sector, and a 21.0x multiple to the remainder of the S&P 500 for 2026.
According to the strategists, the higher S&P 500 target is therefore driven primarily by stronger earnings rather than a major expansion in market valuations.
Barclays Sets Bull and Bear Case Targets
Barclays also outlined alternative scenarios for the S&P 500.
For 2026, the bank’s bull case stands at 8,350, while its bear case is 6,750.
For 2027, Barclays sees a bullish scenario of 9,800 and a bearish outcome of 7,800.
These scenarios highlight the wide range of possible outcomes depending on earnings growth, interest rates and investor sentiment.
Barclays Downgrades Utilities Sector
Alongside its broader market outlook, Barclays lowered its view on the Utilities sector from Positive to Neutral.
The bank cited regulatory challenges, including uncertainty surrounding wildfire liability reform in California and political resistance to data-center permitting across several US states.
Barclays continues to hold a Positive view on Technology, Media and Telecommunications, as well as Industrials.
It remains Negative on the Consumer sector and Neutral on most other areas of the market.
Strong Earnings Remain the Key Market Driver
Barclays’ latest S&P 500 upgrade shows that corporate earnings remain a central factor supporting the bank’s bullish market outlook.
Technology companies continue to lead profit growth, while higher capital expenditure from major tech firms could provide additional momentum.
However, elevated yields and demanding valuations mean investors may continue to react sharply to earnings disappointments.
For now, Barclays sees stronger earnings as the main force behind its higher S&P 500 2026 price target.
