Deutsche Bank Strategist Predicts S&P 500 to Reach 8000 by 2026

Bankim Chadha, Chief U.S. Equity Strategist at Deutsche Bank, forecasts that the S&P 500 will climb to 8000 by 2026, marking an 18% rise from current levels.

He anticipates a broad-based "earnings boom" across the entire market, extending beyond just the tech sector. Chadha highlights that current market positioning remains near neutral, suggesting approximately 9% additional upside potential.

Despite heightened volatility toward year-end, Chadha believes Wall Street's rally is likely to extend into a fourth consecutive year.

Even amid concerns over a potential AI bubble burst, he expects the S&P 500 to continue rising, driven by robust earnings growth. His projection sees the index reaching 8000 by 2026, up roughly 18% from current levels.

Chadha has maintained long-term optimism about the U.S. economy and equities, even during periods of market pullback and recession fears. He suggests that investors should brace for an "earnings breakout year" in 2025, with growth broadening from leading tech stocks to a wider range of sectors.

"The key rationale is that the market breadth expansion that began in Q3 will persist," he said. "For equities to achieve a soft landing, broader market participation is necessary."

While acknowledging that current price-to-earnings ratios are historically elevated, Chadha argues that strong underlying fundamentals justify further valuation expansion.

He also emphasizes that even without valuation expansion, neutral investor positioning alone leaves room for market gains. "Positioning is not near historical highs—it's closer to neutral," he noted. "At the upper bound of positioning, there's still about 9% upside potential."

Chadha points to robust cross-asset fund flows, with equities continuing to benefit.

Addressing concerns over stretched valuations amid rising stock prices, he remains unfazed: "I'm not worried about valuations because they're cyclical, not absolute—they simply reflect the economic cycle phase the market is in."

He adds that strong demand and healthy supply conditions support maintaining current valuation multiples.