As the first-quarter earnings season concludes and investors turn their attention to the final weeks of the second quarter, the influence of artificial intelligence (AI) continues to be a dominant factor in market discussions. Analysts suggest that AI’s significant contributions to corporate earnings and stock market performance are still unfolding, with many believing the true impact is just beginning to surface.
Scott Chronert, an analyst at Citi, has shown considerable optimism regarding the outlook for corporate profits and the market at large. He has revised his earnings forecasts for the S&P 500, positioning himself as increasingly bullish amidst the AI-driven economic landscape. Chronert’s analysis suggests that conventional economic models are struggling to keep pace with the expansive AI spending cycle, which is fueling growth across various sectors.
Chronert stated, “The underlying earnings trajectory for the S&P 500 is moving down a path that is way beyond what we expected headed into this year.” He raised his earnings estimate for the S&P 500 to $350 for 2026, alongside a preliminary target of $400 for 2027. He also adjusted his base case target for the index at the end of 2026 from 7700 to 8100, citing that the momentum set by Q1 results is likely to propel the market further into the future.
In light of these insights, Citi analysts have been identifying stocks poised for growth in this evolving market environment, particularly those involved with AI technology. Two notable stocks on their radar are Cerebras Systems and Oracle, both of which have received strong endorsements from Wall Street analysts.
Cerebras Systems (CBRS)
Cerebras Systems has emerged as a formidable player in the AI arena, often compared to industry titan Nvidia. Their flagship product, the Wafer Scale Engine, is designed specifically for high-speed AI workloads, boasting a size 58 times larger than traditional GPUs. Cerebras aims to revolutionize AI capabilities across multiple fields, including medical research, cryptography, and energy.
A significant milestone for Cerebras was securing a multi-year agreement with OpenAI, which has led to a backlog of approximately $24.6 billion. This endorsement has fueled investor interest, particularly following its IPO on May 14, during which the company raised about $6.38 billion by selling shares at $185 each. Despite a tumultuous post-IPO period, where the stock fell by 27%, Citi’s Atif Malik encourages investors to appreciate Cerebras’ competitive edge in the fast AI sector.
Malik emphasized that Cerebras holds a first-mover advantage within a rapidly growing niche of the AI market, predicting that the company could capture 40-50% of a $130 billion market by 2030. He supports his view with a Buy rating and a price target of $340, indicating a potential upside of 50%.
Cerebras currently carries a unanimous Strong Buy rating from analysts, with the stock trading at around $226.82 and an average price target suggesting a possible 30% increase in value over the next year.
Oracle (ORCL)
In a world increasingly reliant on cloud infrastructure, Oracle has risen to prominence as a leader in AI and cloud services. The company has reported impressive growth, especially in its AI infrastructure, which saw a year-over-year revenue increase of 243%. With total revenue reaching $17.2 billion—up 22% from the previous year—Oracle’s cloud services continue to gain traction, with enthusiasm from the market evident.
Oracle is set to report its fiscal fourth-quarter results soon, with analysts predicting revenues just over $19 billion. Citi’s Tyler Radke has expressed confidence in Oracle’s capacity to capitalize on its expanding AI contracts, placing a Buy rating on the stock with a target of $330, which implies a potential upside of 60%.
Currently, Oracle enjoys a Strong Buy consensus rating from Wall Street, supported by 28 Buy recommendations and 5 Holds, with shares trading at approximately $205.81 and a predicted target price of $269.93.
Amidst these advancements in AI and the stock market’s evolving landscape, analysts advocate for careful examination and analysis before any investment decisions are made, marking AI as a pivotal theme for future growth and corporate performance.
