Wall Street looks ahead to 2026 US stocks: the S&P 500 target is as high as 8,000 points, and AI and policy are key variables

The Zhitong Finance App learned that near the end of the year, a number of top Wall Street investment banks have successively released their forecasts for the 2026 S&P 500 index. Despite differences in target points, the general consensus is that US stocks are expected to continue to rise, driven by the continuation of the wave of artificial intelligence (AI) investment, a shift in monetary policy easing, and the spread of profit growth.

HSBC: The S&P 500 Index is expected to reach 7,500 points by the end of 2026

According to the market outlook report released by HSBC, the bank set the target point for the S&P 500 index at 7,500 points by the end of 2026. It is expected that, driven by the AI investment boom, the index will achieve a second consecutive year of double-digit growth.

Nicole Inui, head of equity strategy in the Americas at HSBC, said that with the support of “macroeconomic stability, easing of policy uncertainty, and a boom in AI investment,” the earnings per share of S&P 500 companies are expected to increase by 12%.

The report points out that in 2026, the US economy will show a “two-speed growth” pattern: strong performance in the AI sector will offset the cautious trend of American consumers.

At the same time, HSBC predicts that the US gross domestic product (GDP) will grow by 1.7% in 2026, slightly lower than the 1.8% expected by the market; the inflation rate will rise to 3%, which is higher than the 2% policy target set by the Federal Reserve.

“We believe the main market line in 2026 will be similar to 2025, including core themes such as the growth boom led by AI investment, consumer segmentation, and policy uncertainty,” Inui said.

The bank expects that with the “escalation of the AI arms race”, related capital expenditure will continue to dominate economic activity, and AI-related spending by hyperscale enterprises is expected to exceed 500 billion US dollars in 2026. This expenditure will benefit other industries, such as utilities and industry, and may also crowd out capital and labor supplies in other sectors.

Furthermore, HSBC warned that due to multiple factors, the divide between high-income and low-income consumers in the US will further intensify in 2026. Inui explained, “The Federal Reserve's lack of interest rate cuts, high inflation stickiness, labor market fluctuations, and weakening or rising uncertainty in fiscal support are putting pressure on consumers.” She added that adjustments to welfare programs such as food stamps (SNAP) have affected 12% of American households.

HSBC's target price for the S&P 500 is based on expected earnings per share of $300 (up 12% year over year), which is slightly lower than the market's general expectation of $305.

Inui concluded, “Based on the above assumptions, we used a price-earnings ratio of 25 times over the past 12 months (average since this year) to arrive at a target of 7,500 points for the S&P 500 index at the end of 2026.” At the same time, she cautioned that the deterioration of the labor market, continued rise in inflation, and heightened trade policy uncertainty are all key risk factors.

Faxing: The economy will achieve super-trend growth in 2026, according to the target level of the S&P 500 index at 7,300 points

Société Générale predicts that the potential fluctuation range of the S&P 500 index in 2026 will be higher than usual, and the Federal Reserve's policy path is expected to have a key impact on market trends.

The bank indicated in a recently released investor report that this benchmark index may hit 7,300 points in the first half of 2026 and is expected to maintain this level until the end of the year. This forecast is based on expected earnings of $333 per share in 2027, which is about 22 times the valuation level.

At the same time, the investment bank outlined a variety of scenarios: under a bear market scenario, the index may fall to around 6,700 points, while the target level of the bull market will rise to 7,700 points, reflecting the extent of divergence in potential outcomes due to uncertainty in monetary policy.

Societe Generale also anticipates that the Federal Reserve will cut interest rates twice before the end of Federal Reserve Chairman Powell's term in May 2026. At the same time, the bank said that the upcoming leadership change of the central bank is expected to boost investor sentiment.

In addition to monetary policy, the bank expects the global economy to achieve super-trend growth in 2026. Strong financial support and an accelerated capital expenditure cycle (covering the technology industry and traditional industries) are seen as the core pillars of improving economic prospects.

Barclays raised its S&P 500 target price and is expected to hit 7,400 points by the end of 2026

Barclays strategists raised the expected target of the S&P 500 index to 7,400 points at the end of 2026 and said that despite weak macroeconomic growth, large technology stocks have performed strongly, and the monetary and fiscal environment continues to improve.

The Barclays stock strategy team led by Venu Krishna pointed out in a research report that the latest target is 5.7% higher than the 7,000 points previously set, while raising the S&P 500 earnings forecast for 2026 from $295 to $305 per share. They believe that in an environment of low macroeconomic growth, large technology stocks continue to operate steadily, and competition in the AI field shows no sign of cooling down, so the profit growth rate of the technology industry will exceed Wall Street's general expectations.

However, excluding the technology sector, strategists warned that given the rise in the level of inflation and unemployment compared to this year, which will put pressure on overall economic activity and consumption, the earnings per share of the non-tech sector may fall short of market consensus expectations.

The report points out that the Federal Reserve's interest rate cuts will benefit valuations, especially cyclical sectors and growth stocks. However, the strategist stressed that although it is currently assumed that the unemployment rate will “remain within a reasonable range corresponding to neutral interest rates,” the accelerated economic downturn is still the biggest short-term risk.

Furthermore, although “the possibility of further tariff increases has been basically ruled out,” strategists warned that some price pressures are “in the process of transmission” and have not yet been fully demonstrated, yet consumer confidence is currently at a low point for many years.

The team also warned that the US midterm election year was often characterized by weakening stock market returns.

UBS: AI-driven gains continue, S&P 500 targets 7,500 points at the end of 2026

UBS Global Research released a report saying that the AI-driven rise in US stocks will continue until 2026. The bank has set a target of 7,500 points for the S&P 500 index at the end of next year. The core logic is that corporate profits are expected to maintain strong growth, and the highly concentrated but resilient technology sector will continue to contribute to the increase.

The European investment bank said, “We expect the profits of S&P 500 companies to increase by 14.4% throughout 2026. After two quarters of slow growth, profit growth is expected to pick up at an accelerated pace starting in the second quarter of next year.”

At the same time, the report pointed out that although there are still market concerns about bubble risks and AI-related individual stock valuations, it is expected that the actual impact of such concerns on the market will be limited.

Komo: The S&P 500 index is expected to hit 7,500 points in 2026, and the Fed will continue to cut interest rates or break through 8,000 points

J.P. Morgan's top stock market strategy team anticipates that 2026 will be another good year for US investors.

The stock strategy team led by Dubravko Lakos-Bujas set a target of 7,500 points for the S&P 500 index at the end of 2026, and also pointed out that if the Federal Reserve continues to implement interest rate cuts, this benchmark index is expected to break through 8,000 points in the next year.

J.P. Morgan Chase said in a customer report: “Despite concerns about the AI bubble and valuation pressure in the market, we believe that the current high price-earnings ratio reflects the expectations of super-trend profit growth, the AI capital expenditure boom, increased shareholder returns, and loose fiscal policies (the “Big and Beautiful Act”).”

“More importantly, the profit benefits brought about by deregulation and the expansion of the scope of AI-related productivity improvements have not been fully recognized by the market.”

The bank proposed a forecast that the S&P 500 index will reach 7,500 points in 2026, mainly based on the expected profit growth rate of 13% to 15% over the next two years.

In the benchmark scenario, J.P. Morgan expects the Federal Reserve to cut interest rates two more times before entering a lengthy suspension phase. The bank believes that continued improvement in the inflation situation will prompt the Federal Reserve to step up its efforts to cut interest rates. This factor will push the S&P 500 index to 8,000 points and above.

The agency also pointed out that the US economy is showing increasingly obvious K-type differentiation, and the widening gap between rich and poor is reshaping consumption habits and consumer confidence.

According to J.P. Morgan Chase, this economic fragmentation may cause market sentiment to “easily fluctuate sharply”: on the one hand, unhealthy economic fundamentals, and on the other hand, the prospects for large enterprises benefiting from the expansion of AI applications across industries continue to improve, forming a stark contrast between the two.

The strategy team wrote in the report: “Businesses and governments around the world are scrambling to invest in AI, not only in pursuit of increased productivity, but also due to concerns about elimination.”

“The AI industry is gradually spreading globally and covering diverse industries — from technology and utilities to banking, healthcare, and logistics. In the process, there will inevitably be industry winners and losers. The core challenge is that this disruptive transformation is taking place in an already unhealthy K-type economic environment, and AI is expected to further exacerbate this fragmentation. The AI-related 'wall of worries' is likely to persist for years to come.”

Damo: Short-term weakness is a good layout opportunity. The S&P 500 index is expected to rise to 7,800 points next year

Morgan Stanley strategist Michael Wilson is also optimistic and expects the S&P 500 index to rise to 7,800 points over the next year.

Wilson believes that the recent wave of market sell-offs is nearing its end, and any short-term weakness is a good opportunity to lay out long positions in 2026. He expects that the Federal Reserve's interest rate cuts will support the stock market, while AI technology will drive corporate efficiency improvements. Its strategy team is particularly optimistic about non-essential consumer goods, healthcare, finance, industrial sectors, and small-cap stocks.

Deutsche Bank: Profit diffusion drives the S&P 500 index to hit 8,000 points at the end of 2026

Deutsche Bank showed Wall Street's most optimistic expectations and set a S&P 500 target of 8,000 points by the end of 2026. The bank's confidence stems from its expectations of a “diffusion” of profit growth.

Deutsche Bank stock strategists predict that earnings per share of the S&P 500 will increase sharply by 14% to $320 next year. The bank believes that the growth momentum brought by AI will break through the category of the “Big Seven US stocks” and spread to a wider range of market sectors such as financial stocks and cyclical sectors, thus driving a round of bullish market coverage with wider coverage.

A team of analysts led by Jim Reid defined 2026 as “by no means a dull year” and pointed out that rapid AI development will still dominate market sentiment. At the economic level, Deutsche Bank economists have raised the forecast for the US GDP growth rate in 2026 to 2.4%. The reasons include a technical rebound after the government shutdown, interest rate cuts by the Federal Reserve, fiscal support, and easing trade uncertainty.