Wall Street's most aggressive forecasts for the 2026 stock market have begun to surface—with some predicting that the S&P 500 (^GSPC) could climb to the 8,000-point threshold as the AI boom continues to reshape the economy and financial markets.
In its latest outlook report released on Tuesday, Deutsche Bank set a year-end 2026 target of 8,000 points for the benchmark index. The bank stated that the S&P 500 could achieve "mid-teens returns," driven by stronger capital inflows, stock buybacks, and robust earnings momentum (particularly strong since 2025).
According to FactSet data, S&P 500 component companies saw a 13.4% year-over-year earnings growth in Q3 2025.
"We expect corporate earnings to remain strong in 2026, with elevated stock valuations persisting," wrote Deutsche Bank's equity strategy team, led by Binky Chadha.
This forecast sits at the higher end of Wall Street's expectations for next year. For instance, HSBC set a 2026 S&P 500 target of 7,500 points, while JPMorgan projected the index could reach 7,500, with potential to hit 8,000 if the Federal Reserve continues cutting rates.
Morgan Stanley is also bullish on 2026, forecasting the S&P 500 to close at 7,800 points. Strategist Mike Wilson described this outlook as a "new bull market," noting in a recent report that the "rolling recession" earlier this year has ended, with policy support and earnings resilience extending into next year.
A growing number of institutions believe the next phase of the bull market still has room to run.
Wells Fargo is among them, predicting double-digit gains over the next 12 months and a year-end 2026 S&P 500 target of 7,800. The bank expects a "two-stage rally": a first half driven by "reflation hopes" and a stronger second half fueled by AI.
While Wells Fargo sees parallels between the AI boom and past tech-driven cycles, it warns of potential bubbles in the sector. The bank noted that policy and liquidity conditions should support markets ahead of midterm elections but emphasized increasing market-economy linkages.
"A wealth-effect-driven K-shaped economy means a bear market could trigger a recession—an outcome neither the Fed nor the government can afford, especially with midterms approaching," wrote Wells Fargo's equity strategy team, led by Ohsung Kwon. The bank highlighted growing correlations between stock gains and household wealth amid economic bifurcation.
JPMorgan shares a similar view. Its base case for 2026 is a 7,500-point S&P 500, but it sees potential for 8,000 if improved inflation prompts more aggressive Fed easing. The bank expects two additional rate cuts before the Fed pauses.
CME's FedWatch tool shows an 83% probability of a December rate cut, up from ~30% last week.
"Despite AI bubble and valuation concerns, today's premium valuations appropriately reflect above-trend earnings growth, AI capex, shareholder returns, and fiscal stimulus," wrote JPMorgan's chief equity strategist Dubravko Lakos-Bujas, adding that regulatory easing and AI-driven productivity gains remain underappreciated. He forecasts 13-15% earnings growth over two years.
However, the AI boom isn't unfolding in isolation. Like peers, JPMorgan notes AI's advance amid a divided economy: "This transformation is occurring in an already imbalanced K-shaped economy, with AI likely to widen disparities."
HSBC echoed this theme, initiating 2026 coverage with a 7,500-point S&P 500 target, expecting "another year of double-digit gains reminiscent of late-1990s exuberance." The bank anticipates AI investment cycles supporting earnings even as lower-income consumers struggle.
"2025's themes were policy shocks from 'Liberation Day' tax changes, stricter immigration, and broad uncertainty from trade to Fed independence. We expect 2026 to be a 'two-speed economy/market' year," HSBC said.
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