Key Moments
- Citi reiterated a “constructive fundamental outlook for 2026,” underpinned by positive Q4 ’25 earnings trends and improving sales across market caps.
- The bank projects 2026 S&P 500 earnings of $320, remaining above consensus and citing soft-landing conditions and AI-related spending as key supports.
- Following a roughly +4% earnings surprise in the latest season, Citi lifted its 2025 S&P 500 earnings estimate to about $275 while noting unusually stable consensus forecasts.
Strategic Outlook Anchored in Q4 Performance
Investing.com — In a research note to clients on Monday, Citi said that fourth-quarter earnings trends are reinforcing its positive view on the equity market heading into 2026. Analyst Scott Chronert wrote that the bank “maintains a constructive fundamental outlook for 2026, supported by positive Q4 ’25 earnings trends and an accelerating sales trajectory across market capitalizations.”
The firm highlighted that consensus earnings expectations for the current year have shown an uncommon degree of stability. Citi views this lack of material revisions at this point in the calendar as a favorable indicator for the earnings backdrop.
Above-Consensus S&P 500 Earnings Targets
Chronert affirmed that Citi continues to forecast S&P 500 earnings of $320 for 2026, a level he described as above the prevailing consensus. He attributed this stance to “ongoing soft-landing conditions and AI spending tailwinds.”
Citi also reported that the most recent earnings season produced a “positive earnings surprise in line with our +4% expectation,” prompting the bank to lift its full-year 2025 S&P 500 earnings estimate to about $275.
| Metric | Citi View / Outcome |
|---|---|
| Latest earnings season surprise | “Positive earnings surprise in line with our +4% expectation” |
| 2025 S&P 500 earnings estimate | About $275 |
| 2026 S&P 500 earnings projection | $320 |
Policy Developments and Tariff Risk
On the policy front, Citi argued that the recent IEEPA ruling “should be an incremental positive to earnings,” even as it cautioned that tariff-related volatility remains a risk given the renewed policy uncertainty. The bank noted that uncertainty around tariffs has increased following a recent Supreme Court decision, but it emphasized that its broader fundamental view has not changed.
Sales Trends by Market Capitalization
Citi observed that sales momentum has been particularly strong among larger companies, pointing to an “accelerating bias in sales and earnings trajectories for large cap over the past year.” At the same time, the bank said that smaller and mid-sized firms will need to deliver stronger margin performance to achieve anticipated growth outcomes.
The bank added that 2026 earnings forecasts have “remained stable at the index level,” describing this as encouraging in light of the typical pattern of guidance resets early in the year.
AI, Disruption, and Valuation Dynamics
Addressing the impact of artificial intelligence, Citi stated that worries about disruption are unlikely to fade quickly. The bank expects these concerns to “persist and be reflected more in valuations than in ’26 earnings expectations.”
Despite ongoing policy and tariff uncertainties, Citi reiterated that its overarching fundamental stance on the equity market remains intact.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
