Last week, UBS (NYSE:UBS) raised its year-end price target for the S&P 500 to 5,900, attributing the increase to a conducive environment for U.S. equities. The Swiss investment bank also introduced a mid-2025 forecast for the index, setting the target at 6,200, signaling confidence in the market’s future performance.

The upgraded targets hinge on several pivotal factors, including robust earnings growth, the trend of disinflation, the prospect of interest rate reductions by the Federal Reserve, and a significant rise in investments in artificial intelligence. 

UBS strategists believe that despite a high market price-to-earnings (P/E) ratio, it is justified by the favorable macroeconomic climate. UBS projects an 11% rise in earnings for the S&P 500 in 2024, which would equate to $250 per share. The firm has also increased its earnings growth estimate for 2025 to 8%, or $270 per share. 

The outlook for U.S. stocks is deemed constructive, supported by the ongoing trend of disinflation. Moreover, the anticipation of the Federal Reserve shifting to a rate-cutting stance is considered a boon for the equity markets. Strategists from UBS anticipate that the Fed will implement two rate cuts in 2024, with the first expected in September.

Investment in artificial intelligence is underscored as a major element contributing to the optimistic view of U.S. equities. This surge in AI investment is expected to play a significant role in shaping the market’s trajectory.

The brokerage firm also suggested that if conditions remain favorable, and with the Fed likely to reduce rates amid an investment and innovation boom, the market could see even higher valuations. In such a scenario, a year-end target of 6,500 is considered achievable.

But the broader market isn’t the only thing getting upgrades from analysts. Here are three stocks that recently received well deserved analyst upgrades as well.

Apple (AAPL)

Loop Capital raised its rating on Apple (NASDAQ:AAPL) shares from Hold to Buy, setting a new price target of $300, a significant increase from the previous target of $170. The investment and research company’s optimism is rooted in Apple’s potential to become the preferred platform for the next generation of AI technologies. This adjustment represents one of the notable analyst upgrades in the tech sector.

The upgrade follows analysis by Loop Capital’s supply chain analysts, which indicate that Apple could establish itself as the go-to “base camp” for consumers’ general AI needs. This potential mirrors Apple’s historical positioning at the forefront of major tech trends with its iPhone and iPod devices. 

Accordingly, these previous shifts were instrumental in driving the company’s stock value, and the emerging AI trend could have a comparable impact. Loop had previously downgraded Apple to Hold in May 2023 due to expectations of a reduction in iPhone builds and shipments throughout the year. 

This forecast was validated as iPhone sales faced challenges in the September quarter of 2023 and continued into February 2024. Loop Capital now expresses hope that their current analysis will prove to be equally insightful. 

Block (SQ)

Block Inc. (NYSE:SQ), formerly known as Square, received an upgraded stock rating from William Blair, moving from Market Perform to Outperform. This change is part of a series of positive analyst upgrades that William Blair highlighted, noting several key factors contributing to the upgraded outlook.

Block has made significant strides in simplifying merchant onboarding and has introduced new solutions in various verticals, including hospitality. CEO Jack Dorsey’s leadership is credited with bringing renewed vigor to the company and driving innovations such as the consolidation of apps and the introduction of Tap-to-Pay on iPhone capabilities.

Cash App, Block’s mobile payment service, is also recognized for its growing influence as a neobank leader. The addition of new features like short-term loans is expected to enhance monetization opportunities for the company. The analyst further noted Block’s impressive expense discipline.

The report suggests that the company’s strong operating leverage is likely to persist. Furthermore, there is potential for further growth through Square distribution deals, although specifics of such deals have not been disclosed. 

Shopify (SHOP)

Bank of America Securities issued an update on Shopify Inc. (NYSE:SHOP), raising the stock’s rating from Neutral to Buy and adjusting the price target to $82.00, as part of the recent analyst upgrades highlighting several reasons for optimism. These include Shopify’s improved margin trajectory and balanced growth.

Under the direction of the new CFO, Jeff Hoffmeister, the company is expected to continue its solid revenue growth and free cash flow (FCF) conversion. The optimism is based on factors such as a robust baseline e-commerce growth, consistent market share gains, and disciplined spending on expenses.

Shopify, which provides a commerce platform for businesses of all sizes, has been experiencing years of declining margins. However, the company is now believed to be on a path to recovery, with expectations for sustained revenue increases and better financial management.

On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.