Double-digit profits are in sight for three consecutive years. Wall Street says the US stock bull market is still supported

The Zhitong Finance App learned that observers who doubt that the US corporate growth engine is about to shut down should pay attention; there is still fuel in the fuel tank. According to data compiled by Jefferies, the information conveyed by sell-side analysts is that through a summary analysis of target prices from the bottom up, the profit growth rate of the S&P 500 index is expected to accelerate year by year until 2027. This will translate into three consecutive years of double-digit earnings expansion, a rare phenomenon that has historically often been accompanied by higher-than-average returns on the S&P 500 index.

To achieve this forecast, many favorable monetary and geopolitical conditions are required. Despite this, the estimate reflects Wall Street researchers' confidence that despite market concerns about excessive concentration of positions and high valuations, the profit resilience of the key pillars supporting this three-year bull market remains stable.

“Earnings growth is expected not only to remain on the current trajectory above the long-term historical average, but may even accelerate further,” said Andrew Greenbaum, senior vice president of US equity product management at Jefferies. “Coupled with the overall fundamentals still providing directional support for US stocks, the situation is even more optimistic.”

According to the data, there are still about four weeks until the fourth quarter earnings season, and analysts expect S&P 500 companies to achieve 8.3% profit growth. This will drive profit growth of 12% for the whole year.

As for next year's forecast, earnings per share are expected to rise 5% to $310 after the peak of trade policy uncertainty, which means a 13% year-on-year increase in earnings. That number is expected to rise to 14% by 2027.

Over the past 35 years, the S&P 500 index has only achieved double-digit profit growth for three consecutive years: 1993-1995 and 2003-2005, respectively. The benchmark stock index achieved an annualized return of 13% over each period, exceeding its multi-year average of 10%.

According to the data, the information technology, materials and industrial sectors are expected to achieve the highest year-on-year profit growth in 2026. Essential consumer goods stocks, which are generally known for their defensive characteristics, are expected to lag behind the market in terms of profit expansion.

Sell-side analysts who cover S&P 500 stocks are known for being non-skeptics, so their expectations may have been too high.

Analyst Michael Casper said, “The profit outlook is really strong, but when expectations are so high, if performance falls short of expectations, we usually see some fluctuations.”

There is still uncertainty about the pace of the Federal Reserve's interest rate cuts, and the full impact of US President Trump's tariff policy has yet to be fully felt in the economy.

For some people on Wall Street, the reason for optimism comes from the acceleration of profit expansion in other sectors other than the small tech giants driving this round of gains. According to estimates, the S&P 500 index constituent stocks excluding the “Big Seven” will achieve 13% profit growth in 2026, which is not far different from the expected 18% increase of the seven high-growth giants. Optimism about fiscal and monetary stimulus policies may also help.

“The overall context is positive for risky assets,” wrote Manish Cabra, head of US equity strategy at Société Générale. He expects the S&P 500 to reach 7,300 points next year, and is optimistic about sectors such as industry, utilities, and finance. It is too early to assert that the bull market is over.”