Citigroup boosts S&P 500 forecast as AI-led growth supports equities

Citigroup has become the latest Wall Street brokerage to raise its year-end 2026 target for the S&P 500, forecasting the benchmark index will surpass the 8,000 level as strong corporate earnings and artificial intelligence-driven growth continue to support equity markets.

The brokerage increased its target for the S&P 500 to 8,100 from 7,700, implying an upside of roughly 10% from the index's most recent closing level.

The move comes as the widely followed benchmark has gained nearly 8% so far this year, although it experienced a sharp decline on Friday following stronger-than-expected US nonfarm payrolls data.

Citi upgrades earnings forecast

Alongside the higher index target, Citigroup raised its earnings-per-share forecast for the S&P 500 to $350 for 2026 from its previous estimate of $320 issued in December 2025.

The bank also introduced a preliminary earnings-per-share target of $400 for 2027, reflecting expectations that earnings growth will remain a key driver of market performance over the coming years.

Citigroup joins a growing number of brokerages that have adopted a more optimistic outlook on equities, arguing that momentum from artificial intelligence investments and resilient corporate earnings can help offset inflationary pressures and supply-related risks stemming from conflict in the Middle East in the near term.

"We have high confidence in continued earnings beats through year-end," Citigroup said in a note dated June 5.

Questions remain beyond 2027

Despite its constructive near-term outlook, Citi cautioned that the sustainability of AI-led growth remains uncertain over a longer horizon.

The bank noted that "persistence of AI-driven growth beyond 2027 remains a key question."

According to Citi, the current environment differs from a traditional economic cycle and instead resembles a large-scale investment boom.

"Our view is that this is not a traditional cycle and looks more like a one-time capex supercycle, thus increasing the burden on earnings growth and related expectation to drive index price action," the bank said.

Citi strategists added that while AI-related ecosystems are expected to expand beyond technology companies, investor focus will eventually shift to whether businesses can deliver the productivity gains promised by artificial intelligence.

Wealth management expansion focuses on Asia

Meanwhile, Citigroup is planning to direct a significant share of its global wealth management hiring towards Asia, where its private banking operations are growing more rapidly and generating stronger productivity than in other regions.

The hiring initiative is part of Chief Executive Officer Jane Fraser's broader restructuring strategy aimed at improving returns from the bank's wealth management division.

Speaking in Hong Kong, Andy Sieg, Citi's head of global wealth, said Asia had emerged as the strongest-performing segment within the bank's private banking business.

"In the private bank, our business in Asia is the fastest growing part of our private bank," Sieg said in an interview. "It's the most productive area of the private bank."

While Sieg did not provide a detailed regional breakdown of planned hiring, he indicated that Asia would account for a substantial portion of the recruitment drive.

Earlier this month, Citi announced plans to hire approximately 100 private bankers globally, in addition to nearly 400 specialists.

The recruitment push is intended to strengthen profitability and expand the bank's global wealth management franchise.

The latest hiring plans underscore Citi's confidence in Asia as a key growth market, even as the bank simultaneously maintains a bullish outlook on global equities driven by corporate earnings strength and continued investment in artificial intelligence.