SKN | Barclays Raises 2026 S&P 500 Target as Earnings Take the Lead

Key Takeaways:

• Barclays raised its 2026 S&P 500 target to 7,950 from 7,800, w hile keeping its 2027 target at 8,800.
• The bank lifted its 2026 EPS forecast to $365 from $337 and its 2027 estimate to $414 from $389.
• Barclays is relying primarily on earnings growth rather than higher valuation multiples to justify the target increase.
• The bank remains constructive on technology, media and telecommunications and industrials, while downgrading utilities to Neutral.

Barclays has raised its year-end 2026 S&P 500 target to 7,950 from 7,800, following stronger-than-expected second-quarter corporate earnings. Importantly, the bank’s revision is being driven primarily by an improved earnings outlook rather than a willingness to assign materially higher valuation multiples to U.S. equities.

Barclays Raises Earnings Expectations

Strategists led by Venu Krishna increased Barclays’ fiscal 2026 S&P 500 earnings-per-share forecast to $365 from $337, while lifting the 2027 estimate to $414 from $389. The bank’s base case now assumes 30.8% EPS growth in 2026 and a 21.8-times price-to-earnings multiple.

The earnings backdrop provides the foundation for the bank’s revised view. S&P 500 headline EPS increased by more than 50% year over year in the second quarter, while growth excluding one-time items reached 29.3%. Sales also expanded 13.3%, giving Barclays greater confidence that corporate profitability can continue supporting equity valuations.

Why Barclays Is Letting Earnings Do the Heavy Lifting

More than 86% of S&P 500 companies exceeded consensus estimates during the quarter, well above the long-term median of 75%. Yet Barclays observed that markets continued to punish earnings misses more severely than they rewarded positive surprises, reflecting a higher hurdle rate as yields remain elevated.

That distinction is central to Barclays’ strategy. The bank described its valuation assumptions as deliberately conservative, assigning 23 times earnings to Big Tech, 22 times to the remainder of technology and 21 times to the rest of the S&P 500. In other words, earnings growth, not multiple expansion, is doing most of the work behind the higher target.

Barclays also expects hyperscaler capital expenditure to exceed $1.1 trillion in 2027, supporting the bank’s positive assessment of technology and AI-related investment. Alphabet and Amazon are expected to contribute the largest amounts, followed closely by Meta.

Barclays Refines Sector Positioning

The bank maintained a Positive view on Technology, Media and Telecommunications and Industrials, while remaining Negative on the broader Consumer complex. Utilities, however, were downgraded to Neutral from Positive, reflecting regulatory uncertainty surrounding California wildfire liability reform and political resistance to data-center permitting in several U.S. states.

For substantial global portfolios, Barclays’ message is measured: the bank sees a stronger earnings foundation, but it is not assuming unlimited valuation expansion. Its 2026 bull and bear scenarios of 8,350 and 6,750 underline the range of outcomes still embedded in the outlook.

The strategic question for wealth holders is therefore whether earnings can continue advancing quickly enough to absorb elevated valuations and interest-rate uncertainty. Barclays’ revised framework suggests that profitability remains the principal source of support, making earnings delivery and capital expenditure trends more important than headline index targets alone.

For a confidential discussion regarding your cross-border portfolio structure, U.S. equity exposure or broader international wealth strategy, contact our senior advisory team.