Wall Street strategists are cautiously optimistic that the rally in US stocks has more room to run. The benchmark S&P 500 index is on track to closing its third straight year with double-digit gains. ...

Core Viewpoint - The stock market is expected to continue its upward trajectory, with JPMorgan forecasting the S&P 500 to reach 7,500 by 2026, potentially exceeding 8,000 if the Federal Reserve accelerates rate cuts [1][3]. Group 1: Market Predictions - JPMorgan's analysts predict a significant increase in the S&P 500, driven by stronger earnings, enhanced AI productivity, and favorable policy conditions [3][6]. - Other financial institutions have similar bullish forecasts, with Deutsche Bank predicting 8,000 by the end of 2026 and Morgan Stanley estimating 7,800, both citing AI capital expenditures as a key driver [5][7]. Group 2: AI and Earnings Growth - The anticipated earnings growth for the S&P 500 is projected at 13%–15% over the next two years, supported by substantial AI capital expenditures and increased shareholder payouts [6]. - Major tech companies, including Alphabet, Microsoft, Amazon, and Meta, are expected to invest over $200 billion annually in capital expenditures, primarily focused on AI and data centers [6]. Group 3: Market Valuations - Current stock market valuations are perceived as stretched, raising concerns about the sustainability of optimism reflected in stock prices [2][4]. - The "Magnificent 7" stocks are reported to control approximately 38% of the total market value of the S&P 500, indicating a concentration of value among a few key players [4].

Market Outlook - Goldman Sachs raised its year-end forecast for the S&P 500 (SPX) to 6,900, up from 6,500, highlighting three stocks for investors to consider [1] - Other major investment banks, including Bank of America, are also increasing their S&P 500 forecasts, reflecting optimism around economic resilience and stabilizing inflation [2][3] - The current SPX stands at 6,263, with a year-to-date increase of 6.49% and a 14.8% rise over the past three months [3] Earnings Projections - Goldman projects S&P 500 earnings-per-share (EPS) to grow by 7% for both this year and next, driven by strong consumer demand and margin expansion [4] - The Federal Reserve is expected to support this growth through earlier and deeper interest rate cuts [4] Stock Recommendations - Goldman highlighted three stocks to watch: Kohl's, Intellia Therapeutics, and Gogo Inc., each linked to structural trends that could drive outperformance [6] Kohl's - Kohl's is viewed as a deep value play with a turnaround catalyst, currently trading down 33.40% for the year but up 20.5% over the past 90 days [7][8] - The company is focusing on inventory discipline, cost-cutting, and enhancing its loyalty program to stabilize revenue [9] - Kohl's is expected to benefit from lower bond yields when the Federal Reserve cuts rates, making it attractive for income-minded investors [10] Intellia Therapeutics - Intellia has seen a 45.3% increase in share price over the past month, focusing on CRISPR-based therapies for rare genetic disorders [11][12] - The company is recognized for its strong intellectual property portfolio and is positioned to benefit from the growing importance of gene therapies [13] Gogo Inc. - Gogo, a leader in business aviation connectivity, has seen its stock price rise 117% over the past three months, driven by strong recurring revenues and a 5G rollout [15][16] - The company has received FAA certification for 42 aircraft types, which covers 70% of its current North American customer base [16] - Gogo's growth is supported by a favorable capital markets backdrop and a strong recurring revenue model [19]