RBC Capital Markets raised its year-end target for the S&P 500 to 7,900, up from 7,750, citing resilient earnings growth and continued strength in artificial intelligence-linked sectors.
The new target implies a 7.7% upside from the benchmark index's Thursday close of 7,335.66.
U.S. equities have rallied to record highs in recent weeks as enthusiasm around AI-related investment and expectations of solid profit growth support investor appetite. The S&P 500 posted its biggest monthly percentage gain since November 2020 last month.
RBC's bullish stance follows similar moves by J.P. Morgan and Barclays, which raised their targets for the index last month, citing easing geopolitical risks and improving earnings momentum.
RBC said positive earnings revisions, driven by technology and AI-linked firms, alongside strong demand for AI infrastructure, have supported valuations. U.S. companies have remained resilient to higher costs and geopolitical risks, keeping leadership concentrated in large-cap growth stocks.
Strategists noted the rally has continued despite a challenging macro backdrop marked by sticky inflation, uncertainty over the timing of U.S. rate cuts, and lingering geopolitical risks.
Separately, RBC downgraded U.S. healthcare stocks to "market weight" from "overweight" due to earnings revisions, fund outflows, and policy uncertainty, despite still-attractive valuations.