Morgan Stanley's chief US equity strategist, Michael Wilson, has issued one of the most bullish forecasts for US stocks, predicting the S&P 500 will rise 16% over the next year, supported by robust corporate earnings. Wilson projects the index will reach around 7,800 by the end of 2026, marking one of the highest targets among Wall Street strategists and implying a fourth consecutive year of double-digit gains.
Year-to-date, the S&P 500 has surged 14%, following two years of over 20% returns. Wilson stated in a report, "We are in a new bull market and earnings cycle, particularly for many previously lagging sectors within the index." He expects S&P 500 companies to deliver 17% and 12% earnings-per-share growth over the next two years, citing factors such as improved pricing power, AI-driven efficiency gains, favorable tax and regulatory policies, and stable interest rates.
However, Wilson cautioned that short-term risks could emerge if the Federal Reserve maintains a more hawkish stance than anticipated. He also warned that an overheating economy could reignite inflation in the long run. Notably, Wilson was among the few analysts who remained bullish on US stocks in April, even as markets tumbled following former President Trump's imposition of widespread tariffs. His call proved correct—the S&P 500 later rebounded to record highs as trade tensions eased.
In a widely followed investor survey this year, Wilson was ranked the second-best portfolio strategist, trailing only Piper Sandler’s chief investment strategist, Michael Kantrowitz. As markets approach year-end, US stocks are nearing all-time highs, fueled by stronger-than-expected Q3 corporate earnings. Despite lingering concerns over AI-driven trading, elevated valuations, and risks from the longest US government shutdown in history, investor confidence in economic growth remains intact.
Wedbush Securities' tech research head, Dan Ives, dismissed current AI-related market jitters as "short-sighted," asserting that tech stocks—the primary driver of US equity gains in recent years—will sustain their bull run for at least two more years. Ives highlighted strong demand for semiconductor ETFs, noting a roughly 30% increase since June. He described the current environment as a "capex supercycle" and the early stages of a tech transformation, stating investors are only in "phases two or three" of the AI revolution. He defended big tech’s heavy capital expenditures, arguing that every $1 invested could yield $8–$10 in returns over time.
Jeff Krumpelman, chief investment strategist at Mariner Wealth Advisors, echoed the sentiment, attributing recent tech volatility to profit-taking and shutdown-induced turbulence rather than a fundamental shift in AI or earnings. He emphasized that early-stage AI adoption remains a powerful, multi-year theme, distinct from the dot-com bubble. "This is real. AI is still in its infancy with tangible prospects—nothing like the 2000 internet bubble," he said.
Still, some on Wall Street remain cautious. Goldman Sachs strategist Peter Oppenheimer, who correctly predicted US stocks would underperform global peers this year, expects the trend to persist over the next decade. He forecasts the S&P 500 will deliver annualized returns of just 6.5%, the weakest among major regions, while emerging markets could lead with 10.9% gains.
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