JPMorgan said in a new report that U.S. stocks could continue climbing as a result of a renewed AI boost.
Concretely, the company sees the S&P 500 at 7,600, compared to 7,100 at the moment, amounting to a 7% increase by the end of the year. The new target comes just a month after a downgrade to 7.200.
The document goes on to say that the change is a result of a stronger perspective for technological companies and the adoption of AI. They expect it to boost corporate earnings and offset ongoing concerns regarding the war in Iran.
Bloomberg noted that initial corporate results seem to be helping prospects. For example, Bank of America reported stronger-than-expected quarterly profits driven by a rebound in trading revenue.
The bank's leadership pointed to stable consumer spending and steady credit quality across its lending book as key indicators that economic conditions have remained broadly supportive. As reported by Reuters, the bank said trading activity in both equities and fixed income helped offset softer performance in parts of its lending operations.
CEO Brian Moynihan said the results reflect a "resilient economy," highlighting continued client activity across markets and relatively stable loan performance, according to remarks cited by CNBC in its coverage of the earnings release.
CNBC also noted that Bank of America's consumer business showed consistent demand trends, with spending holding up even as interest rates remain elevated, adding to signs that households have so far absorbed tighter financial conditions.
Looking at AI specifically, JPMorgan noted that the launch of Anthropic's Mythos model has boosted optimism. Close to two in three AI-related companies have outperformed the market since April 7, when Mythos was announced, Bloomberg said.
"In a world where companies and governments around the world compete to invest in artificial intelligence looking to boost productivity and in fear of becoming obsolete, we believe that quality growth will continue to be attractive," reads a passage of JPMorgan's report.
The company also warned that ongoing geopolitical uncertainty could lead to short-term losses, but said renewed escalation looks unlikely. A quick end to the war, moreover, could lead the S&P 500 to reach the 8,000 points milestone.
