Barclays increased its year-end S&P 500 forecast for 2026 by 150 points to 7,950, citing second-quarter earnings performance, including results from technology companies. The bank left its 2027 index target unchanged at 8,800.
Alongside the index revision, Barclays raised its fiscal 2026 EPS projection to $365 from $337. Its estimate for fiscal 2027 was increased to $414 from $389.
The bank’s base-case assumptions incorporate EPS growth of 30.8% during 2026 and a price-to-earnings multiple of 21.8 times.
During the second quarter, headline earnings per share among S&P 500 companies increased more than 50% from a year earlier. Excluding one-time items, EPS growth was 29.3%, while sales increased 13.3%.
Technology Companies Account for Earnings Growth
Big Tech EPS increased 35% during the quarter, accelerating from 30% in the preceding period. The remainder of the technology sector recorded EPS growth of 88%.
Strategists led by Venu Krishna reported that 86.2% of companies exceeded consensus forecasts, above the long-term median of 75% recorded since 1998.
The strategists nevertheless said that “markets still penalized misses much more heavily than they rewarded beats this quarter,” citing the hurdle rate associated with elevated and rising yields.
Alphabet (NASDAQ) and Amazon (NASDAQ) generated most of the upside surprise among Big Tech companies, according to Barclays, while Meta (NASDAQ) fell short of expectations.
The bank forecasts hyperscaler capital expenditure of more than $1.1 trillion in 2027, representing growth of 67% from the prior year. Barclays expects Alphabet and Amazon to account for the largest contributions, with Meta close behind.
Earnings Drive Barclays’ Higher Index Target
Barclays did not increase the valuation multiples used in its sum-of-the-parts framework, with the strategists describing their assumptions as “deliberately conservative.”
For 2026, the framework applies a 23.0-times multiple to Big Tech and a 22.0-times multiple to other technology companies. The remainder of the S&P 500 is assigned a multiple of 21.0 times.
“The result is that earnings do most of the heavy lifting in our target increase,” the strategists wrote.
Barclays set its 2026 bull-case S&P 500 target at 8,350 and its bear-case scenario at 6,750. Its corresponding 2027 scenarios are 9,800 and 7,800.
Utilities Rating Moved to Neutral
Separately, Barclays changed its view on Utilities from Positive to Neutral.
The bank cited regulatory issues including “failure to advance meaningful wildfire liability reform in California, and bipartisan pushback against data center permitting in several U.S. states.”
Barclays continues to hold a Positive view on Technology, Media, and Telecommunications and Industrials, while maintaining a Negative view on the Consumer complex. Its stance on the remaining sectors is Neutral.
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