AI enthusiasm prompts 3 Wall Street banks to raise stock market forecasts

The excitement surrounding artificial intelligence has yet to run its course on Wall Street.

Three analysts recently upgraded their forecasts for the S&P 500 (^GSPC) amid early signs that investments in generative AI are driving earnings growth at large-cap tech companies.

On Sunday, Evercore ISI's Julian Emanuel boosted his year-end price target for the S&P 500 to 6,000 from 4,750, noting the "AI revolution is in the early innings." Emanuel's target is the highest on Wall Street.

Goldman Sachs' equity strategy team boosted its year-end target to 5,600 from 5,200 on Friday. Goldman highlighted that increasing earnings expectations for Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), and Nvidia (NVDA) have "offset the typical pattern of negative revisions to consensus EPS estimates."

"We underappreciated the degree to which those earnings would lift those few stocks and the degree to which those few stocks would drive the rest of the market, and that's basically what we're adjusting for," Goldman Sachs equity strategist Ben Snider told Yahoo Finance.