Stock market gains in the first half of 2023 are underpinned by fundamentals and still have room to run, according to a top Wall Street strategist. In a note to clients on Sunday, Bank of America strategist Savita Subramanian raised her year-end price target for the S&P 500 to 4,300 from 4,000. The new target is about 2.6 percent above the index’s closing price on Friday. The S&P 500 has risen more than 9% so far this year. .SPX YTD Line S&P 500 up more than 9% in 2023. Stocks’ gains this year have come despite stubbornly high inflation and signs that a recession may be on the way later this year. However, Subramanian said investors should be mindful of structural shifts in large companies, including the potential for artificial intelligence to improve efficiency. “The days of easy money are over, but that could be a good thing. Over the past few decades, we have enjoyed growth in financial design: cheap financing, buybacks, and cost-cutting,” Subramanian wrote . “Today, corporate America has shifted its focus to structural benefits – efficiency/automation/artificial intelligence, and bought itself time to adapt with long-term fixed-rate debt. Capital-starved old economic cyclical businesses since 2008 have Become disciplined and self-sufficient, as evidenced by lower betas and more stable earnings.” These changes, Subramanian argues, mean the stock isn’t overvalued despite staggeringly high valuation multiples. “Valuations aren’t low right now, but they are rarely low during a profit recession. Based on cyclically adjusted earnings, valuations suggest a 5% annual price return for the S&P 500 over the next decade – high Negative returns on valuation signals early last year,” Subramanian said. The new target puts Bank of America above average in a CNBC survey of market strategists. The top target for major Wall Street firms remains 4,575 from CFRA’s Sam Stovall. — CNBC’s Michael Bloom contributed reporting.