HSBC lifts S&P 500's year-end target to 8,100 on earnings strength

Sept 8 (Reuters) - HSBC raised its year-end target for the S&P 500 to 8,100 from 7,650 on Tuesday, betting that strong corporate earnings and sustained spending on AI infrastructure will extend the benchmark index's rally.The revised target implies about 4.9% upside from the index's last close. HSBC expects EPS growth of more than 25% in the second half of 2026.

Corporate earnings in the second quarter have exceeded expectations; 86% of the 492 S&P 500 companies that have reported results surpassed analysts' estimates, compared with a long-term average beat rate of 67.5%, according to data compiled by LSEG.

The benchmark index has risen 12.75% this year, weathering bouts of volatility sparked by hostilities in the Middle East and concerns that resilient economic growth and sticky inflation could keep the Federal Reserve hawkish for longer.

While investors remain focused on risks including possible Fed rate hikes, geopolitical uncertainty, U.S. midterm elections and increased liquidity needs from IPOs and AI spending, HSBC said these concerns are largely overblown.The firm, however, said the outlook for investor sentiment and equity valuations remains uncertain, noting that technology stocks have traded within a narrow valuation range despite stronger earnings and record margins, indicating that higher valuations could prove difficult to achieve.

Several major global brokerages, including Goldman Sachs, Morgan Stanley and Citigroup, expect the S&P 500 to end the year at or above the 8,000 level.

(Reporting by Joel Jose in Bengaluru; Editing by Sahal Muhammed)