RBC raises S&P 500 target to 7,900 on AI-driven earnings optimism

Summary

• RBC Capital Markets has raised its year-end target for the S&P 500 to 7,900 from 7,750, citing resilient earnings growth and continued momentum in AI-related spending.
• The brokerage said heavy capital expenditure by major technology firms on AI infrastructure and data centres is supporting earnings expectations for large-cap stocks.
• Despite the bullish index outlook, RBC downgraded the US healthcare sector to “Market Weight” due to policy uncertainty and weaker earnings revisions.

NEW YORK, May 8, 2026 — RBC Capital Markets on Friday raised its year-end target for the S&P 500 to 7,900 from 7,750, becoming one of the most bullish major brokerages on Wall Street as optimism around artificial intelligence spending continues to support US equities.

The revised forecast was issued by RBC’s US Equity Strategy team led by Lori Calvasina. The brokerage cited resilient corporate earnings, sustained AI-related investment and improving market sentiment despite concerns over inflation and interest rates.

Reuters reported that RBC expects earnings growth to remain strong as major technology companies continue investing heavily in AI infrastructure and data centre expansion.

AI infrastructure spending remains key driver

RBC said spending linked to artificial intelligence infrastructure has become a major support for the broader equity market, particularly for large-cap technology and semiconductor companies.

The brokerage highlighted continued demand for advanced AI computing systems, including Nvidia’s latest Blackwell GPU platform, as hyperscalers and enterprise customers expand data centre capacity.

According to the note, AI-related capital expenditure by major US technology firms is helping offset macroeconomic pressures affecting other sectors of the economy.

Healthcare sector downgraded

While remaining positive on the broader market, RBC downgraded US healthcare stocks to “Market Weight” from “Overweight.”

The brokerage cited weaker earnings revisions, persistent investor outflows and growing regulatory uncertainty ahead of the US election cycle as reasons for the downgrade.

RBC said healthcare companies have lagged behind technology-related sectors in delivering positive earnings surprises during recent quarters.

Wall Street targets continue to rise

RBC’s move follows similar upward revisions from other major Wall Street firms in recent weeks as US equity markets continue to recover from early-year volatility.

The S&P 500 has remained supported by strong technology earnings and expectations that AI investment will continue driving revenue growth across semiconductor, cloud computing and infrastructure companies.

RBC’s 7,900 target is among the highest forecasts currently issued by major brokerages for the benchmark US index.

Why this matters

• Institutional confidence:
  Higher index targets from major brokerages signal continued confidence that corporate earnings can withstand macroeconomic uncertainty.
• AI investment cycle:
  Wall Street firms increasingly view AI infrastructure spending as a long-term earnings driver rather than a short-term technology trend.
• Sector divergence:
  The healthcare downgrade highlights that market gains remain concentrated in AI-linked and technology-heavy sectors.
• Market resilience:
  Strong performance in large-cap technology stocks continues to support broader US equity markets despite inflation and rate concerns.

FAQs

Q1. Who issued the revised S&P 500 target?

The revised forecast was issued by RBC Capital Markets’ US Equity Strategy team led by Lori Calvasina.

Q2. What is RBC’s new S&P 500 target?

RBC raised its year-end 2026 target for the S&P 500 to 7,900 from 7,750.

Q3. Why is RBC optimistic on US equities?

The brokerage cited strong corporate earnings and continued AI infrastructure investment by major technology companies.

Q4. Why did RBC downgrade healthcare stocks?

RBC pointed to weaker earnings revisions, investor outflows and policy uncertainty affecting the healthcare sector.