Evercore ISI analysts hiked the S&P 500 year-end price target to 4450 from the prior 4150 to reflect the higher EPS estimates (from $206 to $214). The ongoing AI-driven momentum could push the index to 4450 by “July 4, not Christmas,” they said.

“A.I. rekindles dot.com days; from the 10/1998 Bottom to the 3/2000 Top, SPX +68%, RTY +102%, NDX +353%. History won’t repeat but rhymes, though not to new all-time highs in 2023 or with Momentum of 1995 after a down 1994, the only other year except 2022 where stock and bond returns were negative,” the analysts said in a client note.

The analysts attributed the S&P 500 price target hike to better-than-feared margins, labor strength, pandemic savings, and market momentum. They also urged Evercore’s clients to buy “momentum masters.”

“Momentum Masters, stocks with Price and EPS momentum as well as defensive positioning from Steep Option Skew (Puts expensive vs. Calls) and/or historically high short interest should outperform in further upside,” they added.

Evercore upgraded Communication Services to In-line, citing earnings revisions and valuation. On the other hand, the broker moved lower on Staples “as moderating inflation and pricing power blunt the defensiveness of a sector which lags in Momentum Market.”

Overall, the analysts see the investor focus on AI, which could be the “next big thing” after the crypto bet failed to materialize.

“The Internet in 1999 was the “Next big thing”, and it did in fact revolutionize all our lives,” they concluded.