This year, driven by the wave of artificial intelligence (AI), the S&P 500 index has repeatedly hit new highs, and the target prices shouted by Wall Street leaders are also getting higher and higher.
Following UBS's high target price of 5600 points, Wall Street bear Julian Emanuel, Chief Stock and Quantitative Strategist at Evercore ISI, raised his year-end forecast for the S&P 500 index to 6000 points. This is the highest among major stock strategists tracked by the media, about 10.5% higher than the closing point of the S&P 500 index last Friday.
Emanuel was also one of the most famous bears on Wall Street, having previously predicted that the index would close at 4750 points this year. However, he now predicts that by the end of 2024, the S&P 500 index will experience another double-digit increase.
The optimistic sentiment of investors towards economic resilience, improved corporate profits, and the end of the Federal Reserve's tightening cycle has driven the S&P 500 index up more than 14% this year. Emanuel stated that the easing of inflation and enthusiasm for artificial intelligence will further boost the stock market.
Throughout Wall Street, his latest forecast is higher than the 5600 points predicted by David Kostin of Goldman Sachs, Jonathan Golub of UBS, and Brian Belski of BMO Capital Markets. At present, JPMorgan seems to have become the only "bear" on Wall Street, with a target price of 4200 points, which means the index will fall more than 20% from last Friday's closing level.
Emanuel wrote in a report to clients last Sunday that the pandemic has changed everything. Record breaking stimulus measures, higher cash balances, and lower leverage support consumers. Then there is artificial intelligence. Nowadays, the potential of GenAI (Generative Artificial Intelligence) is changing in every job position and industry.
"The background of slowing inflation, intentional interest rate cuts by the Federal Reserve, and economic growth supports the 'blonde girl' scenario," he added. The "blonde girl" economy usually refers to an economy where high growth and low inflation coexist.
Emanuel also raised his expectations for the S&P 500 index's earnings per share for 2024 and 2025 to $238 and $251, respectively, with an expected year-on-year growth of 8% and 5%.
He also said that if the S&P 500 index jumped to 6000 points before the end of December, with an earnings per share of $238, the P/E ratio of the index would increase to 25 times, but still lower than 28 times during the peak of the Internet foam. He added that the P/E ratio of the S&P 500 index may remain high for an "extended period of time".
He also believes that by the end of 2025, the S&P 500 index may rise to 7000 points.