BofA analysts have lifted their earnings forecast for the S&P 500

BofA Global Research analysts raised their earnings projection for the S&P 500, stating that they now anticipate a 12% gain in profits this year for the businesses in the benchmark index.

BofA has raised its 2024 profits per share projection for S&P 500 companies from $235 to $250. The strategists wrote to their clients saying they think most of these companies had adjusted to a climate of increasing loan rates and "tepid" demand.

According to the experts, tech giants such as Amazon and Meta are expected to invest significantly in enhancing their artificial intelligence skills. This, they added, will boost activity in a variety of industries, including semiconductors, networking, utilities, and commodities.

The news follows analysts' earlier this month rise in the year-end forecast for the S&P 500 to 5,400 from 5,000, which they justified by pointing out that they believe the risk premium on stocks would likely decline as a result of higher expectations for higher corporate earnings.

The S&P 500, according to the experts, does not exhibit "signs of a bubble," such as widespread speculation driven by debt and a disparity between asset prices and their intrinsic values.

Rather, they maintained that the feeling towards US equities is "almost precisely" the same as it was in 1995 when cyclical companies such as energy and technology drove a market surge.

They acknowledged that the kind of "euphoria" seen in the increasing excitement around AI had stopped previous bull markets, and they predicted a spike in demand for well-liked weight-loss medications. However, they pointed out that this excitement has been "ring-fenced" to particular patterns.

(Sources: investing.com, reuters.com)