Bank of America has joined the chorus of investment banks raising S&P 500 forecasts as economic optimism spreads.
The bank raised its S&P 500 earnings per share (EPS) estimates to $250, up from the previous forecast of $235.
Earlier this month BofA raised its year-end prediction to 5,400, equating to roughly a 5% gain from current levels.
Greater investments in artificial intelligence (AI) were one of the key drivers for the EPS boost, strategists at the bank said.
2023 was "a transition year for Corporate America", they said, with companies having now "adjusted to the new higher rate and tepid demand environment".
Tech megacaps like Microsoft, Amazon, Alphabet and Meta Platforms will invest $180 billion this year, with semiconductor companies and networking specialists "the most obvious beneficiaries", the strategists said.
Increased power usage and the construction of data centers will lead to "more demand for electrification, utilities, commodities, etc," they added.
Other banks have also turned more bullish in recent weeks, with Goldman Sachs and UBS upgrading their year-end forecasts for the S&P 500.
Goldman's prediction for the benchmark was lifted to 5,200, while UBS strategists said they expect the index to end 2024 at around 5,400.
Citi yesterday said it was "constructive" in its outlook with an S&P 500 target of 5100, while JPMorgan has been one of the more bearish Wall Street banks, with a 4,200 forecast unchanged since December.