[AFP]
[AFP]

Global investment bank UBS raised its year-end S&P 500 target to 8,100, citing earnings growth at AI and semiconductor companies. Semiconductor stocks staged a sharp two-day rebound on Wall Street on Tuesday even as international oil prices and US Treasury yields rose in tandem, renewing expectations for further gains led by technology shares.

UBS lifted its year-end S&P 500 target from 7,500 to 8,100, according to the financial investment industry. Compared with Tuesday's closing level of 7,509.20, the bank sees room for an additional gain of roughly 7.9% through year-end. UBS set its 2027 target at 8,900.

"The AI upcycle is now in its second year, and technology-led earnings growth continues to support further upside," UBS strategist Keith Parker said. "Beyond the technology sector, we are seeing signs of broadening capital expenditure and demand expansion."

UBS projected that S&P 500 companies could post earnings growth exceeding 28% this year, beating market consensus. Chipmakers scaling up orders to meet rising demand are expected to lead that earnings expansion.

Although markets pulled back recently amid armed conflict in the Middle East and an uncertain macroeconomic outlook, UBS said major risk factors — including the war between the United States and Iran and policy uncertainty under the Donald Trump administration — have largely been priced in.

On Tuesday in New York, bargain hunters moved into AI and semiconductor stocks for a second consecutive session following recent declines, lifting all three major indexes.

The S&P 500 closed at 7,509.20, up 65.92 points, or 0.89%, on Tuesday. The Dow Jones Industrial Average rose 0.74% to 52,224.64, while the tech-heavy NASDAQ Composite gained 1.29% to finish at 25,837.21.

Micron Technology, which had fallen more than 13% last week, surged 12.2% that day. Intel climbed 5.9%, Nvidia rose 2.0%, and SK hynix's American depositary receipts jumped 13.8%.

Strong second-quarter earnings from major companies also bolstered investor sentiment. 3M rose 7.3% after posting results that beat expectations and raising its full-year profit outlook. General Motors gained 4.9%, delivering better-than-expected earnings on the back of solid North American demand.

Oil prices climbing to their highest level in about five weeks on geopolitical tensions in the Middle East capped further gains. Brent crude for September delivery settled up 2.01% at $91.01 a barrel, while West Texas Intermediate for August delivery rose 2.02% to $84.91 a barrel.

Concerns that higher oil prices could stoke inflation pushed the yield on the 10-year US government bond up 4 basis points to 4.63%, and the dollar also strengthened. Even so, the rebound in semiconductor stocks and improved corporate earnings offset the pressure from rising oil prices and yields.

Major Wall Street institutions have been raising their S&P 500 targets in succession since last month, reflecting increased AI investment and improving corporate earnings. Citigroup lifted its year-end target from 7,700 to 8,100 on June 8, citing the resilience of S&P 500 earnings and AI-driven growth. JPMorgan also raised its target from 7,600 to 7,800 on June 24.


kacew@heraldcorp.com