(Reuters) -HSBC ( HSBC ) on Tuesday raised its year-end S&P 500 index target by more than 800 points to 6,400, citing euphoria around artificial intelligence and easing U.S. policy uncertainty.

The upgrade comes after similar moves from other brokerages, including Goldman Sachs and BofA Global Research, last month.

"The AI trade is powering the tech/AI cohort higher (roughly half of the S&P 500), while reduced policy uncertainty (namely tariffs) is fueling the 'rest' of the market," HSBC ( HSBC ) strategists wrote in a note.

The S&P 500 has rebounded 30.8% since its April 8 low, following U.S. President Donald Trump's 'Liberation Day' tariffs. The index notched fresh highs in July, driven by upbeat earnings from tech giants Microsoft ( MSFT ) and Meta Platforms ( META ), which renewed investor optimism around AI.

HSBC's ( HSBC ) new target represents a marginal 1.1% upside to the index's last close at 6,329.94. Its previous target was 5,600 for the index.

The brokerage expects slower growth in the U.S. in the second half of the year, allowing the Federal Reserve to reduce interest rates, and sees the tariff impact to remain muted and temporary.

But in its bull-case scenario, HSBC ( HSBC ) expects the index to end the year at 7,000.

"We believe there is still room for margins to expand in tech...don't see valuations as stretched for the tech sector," HSBC ( HSBC ) strategists said in a note to clients.

(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Anil D'Silva and Shinjini Ganguli)