According to one of Wall Street’s top strategists, stocks’ first half of 2023 rally is supported by fundamentals and still has upside potential. In a note to clients on Sunday, Bank of America strategist Savita Subramanian raised her year-end price target for the S&P 500 from 4,000 to 4,300. The new target is about 2.6% above the index’s close on Friday. The S&P 500 is up more than 9% year-to-date. The .SPX YTD S&P 500 Series is up more than 9% in 2023. Shares are up this year despite high inflation and signs of a potential recession later in the year. Still, Subramanian says investors should be aware of structural changes at large companies, including the potential of artificial intelligence to improve efficiency. Subramanian writes: “The era of easy money is behind us, but that could be a good thing. Over the past few decades, we’ve enjoyed growth that was financially engineered: funding. cheap, buy back and cut costs”. “Today, American Business has shifted its focus to structural benefits – efficiency/automation/AI and has bought itself time to adapt through long-term fixed-rate debt. Cycles. The old economy, underfunded since 2008, has become disciplined and self-sufficient, as evidenced by its lower beta and more stable income.” Subramanian argues that the changes mean the stock isn’t overvalued despite its surprisingly high valuation. “Valuations aren’t low at the moment, but are rarely low during a profit downturn. Based on cyclically adjusted earnings, valuations show a 5% year-over-year price return for S& P 500 over the next decade – better than the negative returns brought in by valuation signals early last year,” Subramanian said. The new target puts Bank of America above average in the CNBC Market Strategist Survey. The highest target among major Wall Street firms remains at 4,575 from CFRA’s Sam Stovall. – Michael Bloom of CNBC contributed reporting.