BofA lifts 2024 S&P 500 profit forecast as AI enters 'virtuous cycle'
Reuters
Published Mar 12, 2024 05:28AM ET
(Reuters) - BofA Global Research raised its earnings forecast for the S&P 500 on Tuesday, projecting a 12% increase in profit for the companies in the benchmark index this year.
The brokerage raised its 2024 earnings per share (EPS) forecast for the index companies to $250 from the previously expected $235.
BofA strategists said that "2023 was a transition year for Corporate America, and companies have now adjusted to the new higher rate and tepid demand environment."
The brokerage expects technology giants such as Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), and META (NASDAQ:META) to spend $180 billion on capital expenditure this year, potentially benefiting from a "virtuous cycle" stemming from investments in artificial intelligence (AI).
"Semis and networking are the most obvious beneficiaries, but increased power usage and the physical build-out of data centers will lead to more demand for electrification, utilities, commodities, etc," strategists led by Ohsung Kwon and Savita Subramanian wrote in a note.
As big tech enters an investment cycle and traditional companies cut costs, the growth differential should merge between tech companies and the rest, the brokerage added.
The brokerage noted that demand recovery will be the key driver of earnings through 2025 and further margin expansion.
Earlier in March, BofA raised its S&P 500 target for this year to 5,400 points, joining other major brokerages in predicting the index would end 2024 in a range of 5,200 to 5,400.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.