Ask any strategist on Park Avenue and you’ll get a bullish sentence or two — but the details differ wildly. As the calendar flips toward 2026, major Wall Street houses have published S&P 500 targets that cluster around double-digit gains, driven by a familiar trio: resilient earnings, expected Fed easing and an AI-led investment binge. The range is notable: conservative shops are cautious, while a few outliers are outright exuberant.
A quick map of the expectations
- Bank of America: 7,100
- JPMorgan: 7,500
- HSBC: 7,500
- RBC: 7,750
- Morgan Stanley: 7,800
- Deutsche Bank: 8,000
- Oppenheimer (John Stoltzfus): 8,100
Those figures — compiled from bank notes and strategist briefs rolled out in December — translate into upside estimates from low single digits to the mid‑teens, depending on the starting point. Oppenheimer’s John Stoltzfus is among the most bullish, projecting roughly an 18% rally into year‑end 2026 on the back of continued growth and looser monetary policy.
Why so many bulls?
The pitch is simple and persuasive. First, corporate profits are expected to extend an earnings cycle: several banks are modeling mid‑teens percentage growth in aggregate S&P 500 earnings next year. Second, markets widely anticipate the Federal Reserve will ease policy, which historically supports higher price/earnings multiples and encourages risk‑taking. Third, artificial intelligence remains the narrative glue — capex on AI infrastructure and software is seen as a fresh growth engine that will lift both mega‑cap tech and a widening set of industries.
That AI argument isn’t abstract. Investors can point to concrete shifts — new product modes and enterprise tooling — that feed the case for sustained tech investment and improved productivity across sectors. For a sense of how that is playing out in software and consumer services, look at the growing deployment of agentic features and in‑app copilots, and integrations that push models into everyday apps like maps and search, signaling more pockets of monetization and productivity gains (examples include Google’s recent moves around AI Mode and Gemini in Maps) see Google’s AI Mode additions and Google Maps’ Gemini integration see Google Maps Gemini.
Not all strategists frame the bull case the same way. Morgan Stanley talks about a “rolling recovery” where different sectors take turns leading, while others emphasize improved shareholder returns via rising buybacks and payout ratios. Deutsche Bank’s note leans on a demand‑supply view of markets — positioning, inflows and buybacks — to justify mid‑teens returns.
Where the bulls diverge
The differences are worth a closer look because they reveal the risks baked into headline targets. Some banks assume a string of Fed rate cuts; others only price in modest easing. A few count on buybacks returning to earlier norms; others warn buybacks could be muted if corporate cash flows soften. And then there’s valuation: the more you lean on multiple expansion, the more exposed you are if investor sentiment cools.
Oppenheimer’s Stoltzfus, who called 2025 closely enough to earn attention, is clear about sector preference: he favors cyclical, economy‑levered names — industrials, financials, consumer discretionary — alongside tech and communications services. That’s a tactical tilt toward breadth, rather than leaning only on a handful of mega‑cap winners.
What could go wrong
The most obvious downside scenarios are familiar: a stickier inflation path that delays Fed cuts; disappointing earnings results; or a tech valuation wobble that reverberates more broadly. There’s also the “AI bubble” critique — if capital is chasing the wrong projects or valuations run too far ahead of fundamentals, a correction could be sharp.
How investors might react
For many, the near‑term message is not an instruction manual but a risk map. If you believe the banks that forecast hefty gains, you’d want exposure to cyclical recovery plays and the parts of tech that monetize AI. If you fear tighter-than-expected policy or a re‑rating, defensive balance and cash cushions make sense. Either way, themes — from AI infrastructure to consumer cyclicals — should guide positioning more than exact index targets.
Markets are betting that earnings and policy will do the heavy lifting. Whether 2026 becomes another year of double‑digit returns or a stumble depends on those two levers — and on whether the broader economy keeps surprising on the upside. The consensus is tilted bullish, but there’s plenty of room for the story to bend one way or the other as the year unfolds.