• Societe Generale strategists advise buying the dip, citing broadening earnings strength beyond Big Tech.
  • The bank raises its 2026 EPS forecast to $335 and sees the S&P 500 reaching 8,000.
  • AI investment remains a key driver, with 86% of companies beating estimates and margins at record highs.

A Bullish Call Amid Momentum Dip

Societe Generale is telling clients to embrace the recent pullback in U.S. equities. In a note released Thursday, the French bank's equity strategy team highlighted that earnings growth is no longer the sole province of mega-cap technology names. With 86% of S&P 500 companies surpassing quarterly earnings estimates, the bank argues the fundamental backdrop supports further gains.

"The broadening of earnings is a critical development," the strategists wrote. "It reduces concentration risk and provides a more sustainable foundation for the rally." Margins are sitting at record highs, and forward earnings estimates for 2026 have been revised upward to $335 per share, according to the note.

The call comes as the S&P 500 experiences a bout of volatility, with investors rotating out of high-flying tech stocks. But SocGen sees this as an opportunity rather than a warning sign. "AI investment remains robust, and we expect it to continue driving productivity and earnings across sectors," they added.

The bank's official year-end target for the S&P 500 stands at 8,000, implying roughly 8% upside from current levels. That aligns with similar bullish projections from other Wall Street institutions, including Goldman Sachs and Citi, which have also set targets near that mark.

AI and Margins Fuel Optimism

Underpinning SocGen's confidence is the sustained capital expenditure on artificial intelligence. "We're seeing AI adoption move beyond the tech sector, with companies in industrials, healthcare, and financials leveraging the technology to boost efficiency," the note said. This, coupled with record margins, suggests that earnings growth is not just a cyclical blip but a structural trend.

The bank acknowledges potential headwinds, including valuation concerns and the possibility of a sharper pullback. However, its strategists argue that the earnings momentum provides a cushion. "Absent a significant shock, we believe the market will resume its upward trajectory," they wrote.

SocGen's advice to buy the dip is a tactical call, but it's rooted in a longer-term view that the U.S. equity market remains well-supported by fundamentals. As always, they caution that investors should remain nimble and watch for any deterioration in the earnings picture.

This article was updated to reflect the latest market data and clarify SocGen's target.