Analysts Forecast S&P 500 Earnings at $500 by 2028

Wall Street analysts have largely maintained their earnings forecasts for the S&P 500, stated Ed Yardeni, president of Yardeni Research. By 2028, they still expect around $500 per share, even after the declines in Alphabet and Intel. Yardeni's own forecast for 2028 is $450, approximately 9% below the consensus of $493 he mentioned in a note on October 24. This means S&P 500 holders are exposed to earnings growth risk, which he considers overly optimistic.

Why earnings aren't lifting the index

In an interview before the U.S. midterm elections, Yardeni said that during the week of October 26, weekly consensus estimates remained roughly unchanged, and analysts maintain strong optimism for 2027 and 2028. According to the note, the index lagged behind these earnings: forward earnings per share expected over the next 12 months rose by 31% over the year, while the S&P 500 gained 11.4%. As a result, the forward price-to-earnings multiple, which evaluates stocks relative to expected earnings, decreased by 13.5% over the year. Yardeni's target of 7,900 by year-end applies a multiple of 18.6 to the earnings forecast of $425 for 2027. The consensus for 2027 at $424.56 practically matches this forecast. He reduced the multiple from 19.8 in September when he moved the previous target of 8,400 to mid-2027.

Credit stress in AI

Estimates held after the Nasdaq-100 crash at the end of October, wiping out about $2 trillion in market value. Alphabet experienced its worst session in history, and Intel fell nearly 29% in one day. Yardeni says bond investors are monitoring borrowers in the AI sector, calling it a healthy trend. In the note, he refers to the widening spreads of credit default swaps at Oracle and cloud service provider for AI CoreWeave. Hyperscalers, he says, have already locked in commitments for data centers and order portfolios.

Yardeni believes that AI company bonds look better than their stocks and notes: it's unclear when expenses will start generating profits. Therefore, the target of 7,900 relies on the multiple: earnings for 2027 already match the consensus. A drop in bond yields would ease pressure, while rising borrowing costs for AI could first reduce forecasts for 2028.