The bulls are getting even more bullish.

After the S&P 500 closed at a record high last week, analysts from both Goldman Sachs and Evercore upped their price targets for the end of the year—predicting even more record setting ahead.

Evercore strategists have officially won the “most optimistic” analyst award after publishing a note over the weekend lifting their S&P 500 year-end outlook to 6,000 from their previous projection of 4,750. Evercore Strategist Julian Emanuel forecast that earnings per share for S&P 500 companies will rise 8% in 2024, and another 5% in 2025.

Goldman Sachs updated its end-of-year price target for the third time in 2024, raising it to 5,600 from a previous projection of 5,200, according to a note by Chief US Equity Strategist David Kostin published on Friday.

Both notes expressed optimism about big tech’s ability to keep riding the AI wave.

Goldman Sachs’ Kostin wrote that just five stocks—Microsoft, Nvidia, Google, Amazon, and Meta—have accounted for 60% of the S&P 500’s 15% return this year so far. Kostin predicted that investor enthusiasm over the AI trade will continue to push both their valuations and earnings higher, while profits across the rest of the market will come in higher than expected.

“Our updated forecast incorporates a smaller downward revision to consensus EPS and a larger P/E premium for mega-cap tech,” Kostin wrote.

Evercore’s Emanuel also predicted that AI will continue to boost the entire market, countering the argument that the AI hype cycle has to come to an end. He noted that high valuations from a novel technology like AI can last years, and if the Fed cuts rates in the fall, that could also contribute to an AI-fueled bull run.

He also pointed to the relative strength of consumers even in a high-rate environment as evidence that corporate earnings will buoy stocks.

There’s a flipside to every upside prediction

Yet these analysts still acknowledge that AI hype could come toppling down just as fast as it has become the buzzword to end all other buzzwords. Evercore’s bear case is that the S&P 500 falls back to 4,750 by the end of the year, while Goldman also noted its “catch-down” scenario would leave the S&P 500 at the 4,700 level by the end of 2024.

“The key risk to today’s market leaders is if current analyst estimates prove too optimistic,” Kostin wrote. “Strong upward revisions to earnings creates a higher bar for these stocks, particularly as investors have started to focus more on seeing revenues from investments in AI,” he added.

Goldman Sachs also emphasized that a US presidential year often slows market momentum. Historically, the index has dropped about 4% between late October and early November during election years.

And the good news, as Emanuel pointed out, is that if the bear case comes to pass then it presents investors with a great buying opportunity.—LB

The stock market’s changed. Once dominated by a few huge players, a new wave of engaged retail investors has emerged with more influence than ever. After Earnings is the show that connects the modern investor with the executives and decision-makers who are shaping the markets. Listen now as Austin Hankwitz and Katie Perry bring the conversations that used to only be available to hedge fund managers to the rest of us.

And if all of it happens to be as forecasted, I think one rate cut would be appropriate by year’s end—as well as a medal for myself for best economic forecaster ever. Because any forecast remains just that: a forecast. It is not a lock-down commitment.

Philadelphia Fed President Patrick Harker told his audience at a Global Interdependence Center conference that the Fed’s next move will depend on the data. Despite the fact that it’s a refrain investors have heard often as of late, the Fed seems determined to drill it into our brains.

🟢 What’s up

• Autodesk popped 6.48% after activist investor Starboard amassed a $500 million stake in the software company.
• Best Buy rose 4.68% after UBS upgraded the stock to “buy” thanks to AI tailwinds and new product categories.
• Broadcom rose yet another 5.41% today, continuing its blistering rally higher thanks to one analyst’s declaration that the stock should replace Tesla in the Magnificent 7.
• Micron Technology rose 4.58% after getting upgraded by Cantor Fitzgerald for its exposure to the AI trade.
• Xponential Fitness rose 34.25% after the board announced the appointment of Mark King as the new CEO. King was previously CEO at Taco Bell, where he expanded the company’s footprint dramatically but also brokered a deal to make Cheez-It Tostadas a thing.

What’s down

• AMC Networks plummeted 35.14% after the company announced it’s issuing $125 million in new debt.
• Louisiana Pacific dropped 3.46% after Goldman Sachs analysts downgraded the stock to "sell" and reduced their price target to $81.
• GameStop fell 12.13% almost as soon as the company’s annual shareholder meeting began this afternoon, and no amount of “hodling” could halt the decline.

Private investing is a high-risk, high-reward business that remains opaque and inaccessible for the average person.

But crowdfunding platforms, made possible by a regulation passed by the SEC nearly a decade ago, are giving regular investors a chance to get in on risky startups before they go public.

Now, crowdfunding websites like StartEngine and Republic are targeting individuals who are able to invest hundreds, not millions, into startups. Yet the failures of crowdfunding ventures are a reminder that just because you can do something, doesn’t necessarily mean you should.

Perils and pitfalls

In 2015, the SEC passed an exemption to a regulation known as Regulation A which allowed private companies to fundraise up to $75 million from individuals through crowdfunding platforms.

But because startups using these platforms don’t have publicly traded shares on exchanges, investors can’t easily sell their shares until a company goes public.

And anyone who is a VC knows that the success rate for startups is low—even ones vetted by professional private investors. But people buying shares on crowdfunding platforms often ignore warning signs, and are instead swayed by marketing that promises far higher returns than a regular S&P 500 index fund.

However, the vast majority of startups using crowdfunding are not proving themselves to be wildly successful companies, according to a report from the Wall Street Journal. Roughly 85% of companies that used crowdfunding under Regulation A between 2016 and 2024 had either zero profits, or negative net income.

For example, carmaker Aptera has raised more than $120 million from 17,000 individual investors since 2021, and still has nothing to show for its self-driving cars, according to the WSJ.

While you may not make the millions promised by crowdfunding platforms, the average investor’s best bet is to stick with public markets, where companies are obligated to report on their own financial health.—LB

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• The economy is divided between haves and have-nots, according to Morgan Stanley—and so is the stock market. Analysts outlined the handful of stocks that will continue to outpace their peers, including Coca-Cola, Colgate-Palmolive, and more.
• Social media is so addicting that the surgeon general believes apps like Meta and Snapchat should come with a warning. While social media stocks didn’t fall on the announcement, if warnings are administered with their apps it could do serious damage to their user base.
• Quant investing, or using mathematical models to guide investments, hasn’t been as hot as simply parking money in an index fund—but this year marks a turnaround.
• Big banks like JPMorgan are moving into regional banks’ territory by lending to mid-sized companies in record numbers.
• Newer is better in the overlapping worlds of politics and markets. “Since the late 1860s, eight presidents have served two full terms, with market returns averaging 80% in the first term and a mere 29% in the second,” the Financial Times reported.
• China’s real estate woes continued last month: New home prices fell their fastest in nearly 10 years.

Tomorrow's May Retail Sales report is a key indicator of consumer health, and will go a long way toward determining how the Fed’s battle against inflation is faring. Consensus among economists is that retail sales will rise 0.3% in May, though they’ve been disappointed in the past—after a 0.6% increase in March they expected a 0.4% increase in April, only to be blindsided by an unexpectedly flat 0.0% increase last month.

Unfortunately, there’s a lot holding retail spending back right now, and it seems likely that if there is any growth at all, it won’t wow markets. "We suspect consumption is headed for a more modest pace of growth in the second half of the year," wrote Wells Fargo Chief Economist Jay Bryson in a note to clients late last week. "The personal saving rate has turned lower, consumer credit growth has slowed as delinquencies have increased, and growth in real disposable income has faded amid a moderating labor market."

After the Close

KB Home has climbed slowly but surely this year, despite macroeconomic headwinds keeping the real estate industry relatively sedated. With the Fed holding firm on interest rates and housing supply rising, Wall Street analysts have more “hold” than “buy” ratings on the stock at the moment—but regardless of how things go, the report will provide key insights into the health of the housing market. Consensus: $1.80 EPS, $1.65 billion in revenue.