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“Yardeni Raises S&P 500 Target to 8,400 on “Fabulous Earnings” Momentum” 🚨🚨🚨

Wall Street is becoming increasingly bullish on U.S. stocks, with veteran market strategist Ed Yardeni raising his year-end S&P 500 target to 8,400, up from his previous forecast of 8,250.

The upgrade comes as corporate earnings continue to outperform expectations, giving Yardeni confidence that the current market rally is being supported by something more substantial than investor enthusiasm alone: strong and accelerating profits.

“Fabulous Earnings Momentum”

Yardeni Research described the current second-quarter earnings season as exceptionally strong, coining the term “FEMO,” or Fabulous Earnings Momentum.

According to Yardeni Research, about 90% of S&P 500 companies had reported by August 11, with companies broadly exceeding analysts’ expectations for earnings and profit margins. S&P 500 earnings per share increased approximately 46.7% year over year in the second quarter, although some of that growth was boosted by mark-to-market gains at companies including Alphabet and Amazon and a tax-related gain at Meta.

That earnings strength has helped push forward S&P 500 earnings to record levels and has reinforced the argument that the market’s gains are being driven by improving corporate fundamentals.

Yardeni Boosts Earnings Forecasts

Yardeni isn’t only raising his index target.

The firm increased its S&P 500 earnings-per-share forecast to $375 for 2026, up from $330, while raising its 2027 forecast to $415 from $375.

Those higher earnings expectations are important because stock-market valuations ultimately depend heavily on how much companies are expected to earn.

Yardeni is also forecasting S&P 500 forward earnings to reach approximately $415 by the end of 2026, with earnings potentially climbing toward $550 by the end of 2029 under his broader “Roaring 2020s” scenario.

AI Remains a Major Growth Engine

Artificial intelligence continues to play a major role in the earnings story.

Major technology companies have been spending enormous amounts on data centers, computing infrastructure, networking equipment and AI systems. Those investments are increasingly showing up in revenue growth and profits across portions of the technology sector.

The broader S&P 500 is also benefiting as companies outside traditional technology areas begin participating in the AI-driven investment cycle.

Recent market analysis has pointed to exceptionally strong second-quarter earnings, with AI-related investment remaining a major contributor to corporate profit growth.

For investors, the key question is shifting from “Is AI spending real?” to “How much economic value will companies ultimately generate from all this AI spending?”

So far, earnings are giving the bulls a strong argument.

8,400 Target Means More Upside

The S&P 500 recently traded around record levels near 7,750, meaning Yardeni’s 8,400 target implies additional upside from current levels if his forecast proves correct.

Yardeni’s outlook is particularly notable because his forecast now sits above several other major Wall Street targets.

J.P. Morgan, for example, recently raised its own 2026 year-end S&P 500 target to 8,000, citing stronger earnings and continued optimism surrounding AI investment.

That suggests the bullish outlook is becoming increasingly widespread across Wall Street.

But Risks Haven’t Disappeared

A higher target doesn’t mean the market will move straight upward.

The S&P 500 remains vulnerable to higher Treasury yields, inflation surprises, geopolitical instability, changes in Federal Reserve policy and any significant deterioration in economic growth.

Valuations are also elevated compared with long-term averages, meaning companies may need to continue delivering strong earnings growth to justify current stock prices.

Yardeni acknowledges the possibility of another recession scare, but his base case remains that the economy stays resilient and avoids a major recession. His firm assigns an 80% probability to continuation of its “Roaring 2020s” scenario, while maintaining a 20% probability of a recession severe enough to trigger a bear market.

What This Means for Investors

The biggest takeaway is that the market rally is increasingly being supported by earnings growth rather than valuation expansion alone.

If corporate profits continue beating expectations, companies continue benefiting from AI investment and the economy remains resilient, the S&P 500 could have room to move significantly higher.

But if earnings momentum slows, AI investment fails to generate expected returns, or economic conditions deteriorate, the market’s elevated expectations could become a major source of volatility.

For now, Yardeni is betting that the earnings engine remains strong.

His message to investors is clear: the bull market may not be running out of fuel—the profits are getting stronger.