Several Wall Street firms hiked their year-end outlooks for the S & P 500 , citing continued strength in the artificial intelligence trade and easing concerns tied to tariffs. Deutsche Bank said the broad index can now ended the year at 7,000, up from 6,550. Wells Fargo said it expects the average to finish 2025 at 6,650, an increase of 250 points from the most recent forecast set by the bank’s investment institute. Barclays lifted its year-end price target by 400 points to 6,450. The S & P 500 hit a new record high of 6,550 early Wednesday following some tame inflation data. These firms said the optimism around AI and weaker inflation impacts from President Donald Trump’s levies than initially expected can help investors overlook economic concerns stemming from the weakening labor market. Investors also got a positive signal on the AI front on Tuesday, with Oracle ‘s cloud growth expectations leaving analysts wowed. The “music stops when AI capex stops. Enjoy the party,” Wells Fargo analyst Ohsung Kwon wrote to clients in a Tuesday night note, using shorthand for capital expenditures. “Yes, there is froth,” Kwon added. “But as long as AI capex remains intact, the bull market should continue.” Kwon said the S & P 500 can rally to 7,200 by the end of 2026, which represents more than 10% upside over Tuesday’s close. .SPX YTD mountain The S & P 500 in 2025 Trump’s tariffs prompted worries that subsequent price increases could push the Fed to keep interest rates higher for longer, creating an overhang on the stock market. However, Fed funds futures are pricing in 100% certainty of a cut when the central bank meets next week, according to CME’s FedWatch tool. “While we expect inflation to pick up some, we see the magnitude as modest compared to 2021-2022 and the rise likely to be viewed as temporary,” Binky Chadha, Deutsche Bank’s chief U.S. equity and global strategy, wrote to clients in a Wednesday note announcing his year-end target increase. Though Chadha acknowledged lofty equity valuations, he said they have been driven higher by payout ratios and expectations for resilient earnings growth. (Chadha will be on CNBC’s “The Exchange” at 1pm Wednesday to discuss his new forecast.) Venu Krishna, Barclay’s head of U.S. equity strategy, said the Federal Reserve should lower interest rates three times before the end of 2025 as a way to “counterbalance” the macroenvironment given rising fears around the labor market. He described corporate earnings as “solid,” while noting that global GDP growth is showing signs of stabilization. Krishna raised his 2026 S & P 500 target by 300 points to 7,000. One driver of that excitement is the fact that he’s now positive on the entire technology space, with big tech poised to remain a secular growth story and AI disruption concerns within software companies appearing overblown. “Macro is under pressure, but we take the ‘glass half full’ view,” Krishna wrote to clients in a Tuesday note.