The first-half rally for stocks in 2023 is supported by fundamentals and still has upside remaining, according to one of Wall Street’s top strategists. In a note to clients on Sunday, Bank of America strategist Savita Subramanian hiked her year-end price target for the S & P 500 to 4,300 from 4,000. The new target is about 2.6% above where the index closed on Friday. The S & P 500 is already up more than 9% year-to-date. .SPX YTD line The S & P 500 has gained more than 9% in 2023. The gain for stocks this year has come despite stubbornly high inflation and signs of a potential recession coming later in the year. However, Subramanian said that investors should take note of structural shifts at major companies, including the potential of artificial intelligence to improve efficiency. “The era of easy money is behind us, but that might be a good thing. Over the past few decades we have enjoyed financially engineered growth: cheap financing, buybacks and cost-cutting,” Subramanian wrote. “Today, Corporate America has shifted focus to structural benefits – efficiency/automation/AI and have bought themselves time to adapt via long-dated fixed rate debt. Old economy cyclicals, capital-starved since 2008, have become disciplined and self-sufficient, evidenced by lower betas and more stable earnings.” Those shifts mean that stocks are not overpriced despite surprisingly high valuation multiples, Subramanian argued. “Current valuations are not low, but rarely are low during profits recessions. On cyclically adjusted earnings, valuations argue for price returns of 5% per year for the S & P 500 over the next decade – better than the negative returns yield by valuation signals at the beginning of last year,” Subramanian said. The new target puts Bank of America above the average in the CNBC Market Strategist Survey . The highest target among major Wall Street firms is still 4,575 from CFRA’s Sam Stovall. — CNBC’s Michael Bloom contributed reporting.