Two Big Banks Just Raised Their S&P 500 Targets. Here’s Why.
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Strong earnings, interest rate cuts and a resilient AI boom could mean stocks keep rising in the next year, according to two big Wall Street Banks.
Deutsche Bank on Wednesday raised its year-end target for the S&P 500 (SPX) to 7,000 from 6,550 as analysts led by Binky Chadha boosted their 2025 earnings per share estimate for companies in the benchmark index.
That level would be 7% above the index’s record close Wednesday, which it reached with the help of continued euphoria around the AI trade, powered by Oracle’s (ORCL) blowout guidance, and increasing expectations of interest-rate cuts by the Federal Reserve.
Companies aren’t suffering the pain from President Donald Trump’s tariffs that many investors and economists predicted, Deutsche Bank wrote. “Companies see the hit from tariffs so far as modest and likely to remain manageable,” the analysts wrote.
They said that stock valuations will continue to stay high as companies maintain high payout ratios and earnings stay resilient. Deutsche analysts are projecting earnings growth of more than 9.5% this year and almost 14% next year, above the average it cited for typical non-recession years.
The Deutsche analysts said they continue to like large growth stocks and tech shares, as well as financial shares, but remain underweight in “defensive bond-like sectors” like consumer staples, utilities, real estate, healthcare and restaurants.
Deutsche Bank wasn’t the only Wall Street player that upped its target for the S&P 500 this week. Barclays raised it year-end target to 6,450 from 6,050. While that was below Wednesday’s close, Barclays also increased its 2026 price target for the S&P 500 to 7,000 from 6,700.
Like Deutsche, the Barclays analysts cited buoyant corporate earning projections and the prospect of rate cuts as driving stock price movement.
Still, they were more cautious than Deutsche, seeing “emerging labor market risks” that could offset strong company earnings and “AI-centric growth.”
On balance, however, the Barclays analysts led by Venu Krishna said that while “macro is under pressure” they expect three Fed rate cuts this year to help guide the economy “toward a manageable deceleration.”
BofA Downgrades FedEx, UPS on End of De Minimis Tariff Exemption
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A big Wall Street bank got more cautious about two U.S. shipping giants’ shares today.
Bank of America analysts on Thursday downgraded both FedEx (FDX) and UPS (UPS), setting price targets on shares that were among the lowest on Wall Street.
The analysts cut their rating on FedEx to “neutral” from “buy,” trimming their target by $5 to $240, one of the lower ratings compiled by Visible Alpha and below the average above $269, though above recent prices. Their move on UPS was more dramatic, swapping a neutral rating for an “underperform” and setting an $83 target that is the lowest tracked by Visible Alpha and well below the mean near $107. Its shares were recently around $84.
In both cases, the downbeat changes come with the stocks in the red for the year, badly lagging the S&P 500, which has risen.
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Bank of America cited “increased pressure on volume and costs” at both companies, noting the recent move by the Trump administration to close a tariff exemption for certain low-value items. Some companies have already reported pain as a result, though others have cheered the move.
UPS in late July reported second-quarter revenue that came in higher than expected, but disappointing profits and a decision to not provide profit or revenue forecasts pulled shares down toward current levels. FedEx suspended its outlook in June; its shares are around the price seen after that move.
Both companies’ stocks were higher in recent trading as optimism about interest-rate cuts lifted stocks broadly.
Why Wall Street Analysts Say the Record Run for Oracle Stock is Just Getting Started
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Oracle’s (ORCL) blistering stock gain amid strong AI demand has Wall Street analysts racing to raise their price targets—with most expecting its record run isn’t over yet.
The shares soared 36% on Wednesday to a record high of about $328, a day after the computing giant reported what Deutsche Bank analysts called “truly awesome results” that “underscored its position as the leader in AI infrastructure.” The stock gave up some of those gains on Thursday, but is still up about 90% since the start of this year.
“In our near 20 years covering Oracle and for that matter the entire Software industry, there are few quarterly results that match F1Q both in terms of magnitude of revision and clarity of the moment,” the Deutsche Bank analysts said, pointing to Oracle’s $455 billion backlog, which more than quadrupled from a year ago.
That blowout backlog came as Oracle said it added four multibillion-dollar contracts in its fiscal first quarter, with CEO Safra Catz telling investors that the company expects to gain several more in the next few months.
One of those customers could be OpenAI, according to the Wall Street Journal, which reported Wednesday that the ChatGPT maker struck a deal to spend a whopping $300 billion for computing power over five years, starting in 2027. Oracle declined to remark and OpenAI did not immediately respond to a request for comment.
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Deutsche Bank said that Oracle’s performance Tuesday underscored how the strengths of the computing giant’s underlying infrastructure and range of offerings could help it sustain a competitive advantage in the AI era, and boosted their price target for the stock to $335 from $240, a level it could top soon if it can sustain just some of Wednesday’s momentum.
Other analysts were even more bullish, with Jefferies raising its target to $360 from $270. Bank of America boosted its to $368, calling Oracle a “key AI enabler,” while Citi moved its target up to a new Street high of $410.
Citi analysts said they now view Oracle as a “unique megacap AI winner,” after “one of the strongest quarterly contract signings we’ve come across in all of software.” They added they’ll be watching closely for more details from the company next month at its AI event, where the company plans to unveil a new AI service, co-founder and CTO Larry Ellison said.
CPI Inflation Hit Its Highest Level Since January Last Month
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Inflation continued to crunch household budgets in August as tariffs pushed consumer prices.
Prices as measured by the Consumer Price Index rose 2.9% over 12 months ending in August, the Bureau of Labor Statistics said Thursday. Inflation was up from a 2.7% annual increase in July and reached the highest since January.
“Core” inflation, which excludes volatile prices for food and energy, rose 3.1%, the same annual increase as in July. According to a survey of economists by Dow Jones Newswires and The Wall Street Journal, both increases were in line with forecasters’ expectations.
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Inflation has steadily risen this year as merchants have passed on the costs of President Donald Trump’s sweeping import taxes. The impact has been slow to arrive as businesses had stocked up on inventory in advance of the tariff campaign, but those stockpiles are running out.
“With buffer inventories that had been built ahead of tariffs being depleted, businesses are now forced to replenish stock at elevated prices,” Katy Stoves, investment manager at Mattioli Woods, wrote in a commentary. “With the tariffs looking to be more permanent, companies now have cover to pass these rising costs onto consumers, rather than compressing margins.”
Micron Stock Jumps on Price Target Increase From Citi
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Shares of Micron Technology (MU) surged roughly 8% Thursday when Citi analysts boosted their price target, pointing to an increase in demand for dynamic random-access memory (DRAM) chips and the company’s artificial intelligence exposure.
The analysts raised Micron’s price target to $175 from the previous $150 and affirmed their “buy” rating on the stock.
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In a note to investors, the analysts wrote they believe that the “continued memory upturn is being driven by limited production and better than expected demand, particularly from the data center end market.”
Micron releases its fiscal 2025 fourth-quarter report on Sept. 23, and Citi anticipates adjusted earnings per share of $2.62 and revenue of $11.20 billion, in line with overall analysts’ estimates. However, Citi anticipates the company’s guidance will be well above expectations, “driven by higher DRAM and NAND sales and pricing.”
Micron Technology shares have risen nearly 80% year-to-date.
Meme Stock Opendoor Skyrockets as Firm Names New CEO, Brings Back Co-Founders to Board
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Opendoor Technologies (OPEN) shares soared 50% Thursday, a day after the online real-estate platform named a new CEO, brought back its founders to be on the board, and got a new infusion of cash.
The company announced that former Shopify (SHOP) COO Kaz Nejatian would be taking over as CEO, replacing Carrie Wheeler, who stepped down last month after facing pressure from shareholders as the company struggled in its turnaround efforts.
In addition, Opendoor said co-founders Keith Rabois and Eric Wu were returning to the Board of Directors, with Rabois becoming Chairman. Lead Independent Director Eric Feder explained that the pair “will inject the ‘founder DNA’ and energy at a pivotal moment for Opendoor.”
Along with their new positions, Rabois’ venture capital firm, Khosla Ventures, and Wu have struck securities purchase agreements with Opendoor to invest $40 million in the firm. Opendoor noted that it planned to use the money “to fund continued investment in the business.”
Opendoor Technologies shares have surged since July as retail investors have piled into the meme stock. They ended June trading at $0.53 each but now are approaching $9 with today’s gains.
Stock Futures Tick Higher After August CPI Data
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Futures contracts connected to the Dow Jones Industrial Average were up 0.2% in premarket trading on Thursday.
S&P 500 futures were also up 0.2%.
Nasdaq 100 futures advanced 0.3%.