Wall Street's 2026 S&P 500 Targets: 7,500 to 8,100
Strategists expect double-digit gains next year, with the average target at 7,629 and the most bullish calls reaching 8,000+. Here's what's driving the optimism.
Wall Street strategists are lining up their 2026 forecasts, and the consensus is clear: expect another year of gains, but don't expect a repeat of 2024's 24% surge.
The average S&P 500 year-end target sits at 7,629, representing roughly 12% upside from current levels around 6,930. The median is slightly higher at 7,650. That's a solid forecast, though notably more conservative than the gains delivered over the past two years.
The Bull Case: 8,000 and Beyond
Oppenheimer's John Stoltzfus has the highest target on the Street: 8,100. Deutsche Bank isn't far behind at 8,000, projecting "mid-teens returns" driven by stronger inflows, aggressive buybacks, and continued earnings momentum.
Morgan Stanley's Mike Wilson—who spent much of 2023 as the market's most prominent bear—sees 7,800 as achievable. The thesis: AI investment continues scaling, and the productivity gains are starting to show up in corporate margins.
JPMorgan takes a more conditional view. Their baseline call is 7,500, but the bank sees a path above 8,000 if inflation cooperates and prompts more aggressive Fed rate cuts. That's a big "if" given the December FOMC's hawkish pivot, but markets have a way of forcing the Fed's hand.
The Bear Case: Bank of America at 4%
Not everyone is a believer.
Bank of America has the lowest implied return among major strategists—roughly 4% upside. Their concern: valuations have gotten stretched, and the earnings growth needed to justify current multiples may not materialize.
At 22x forward earnings, the S&P 500 is trading at a premium to historical averages. That's not a problem if earnings deliver, but it leaves less room for error.
What's Driving Expectations
Three factors underpin the bullish consensus.
Earnings growth. Wall Street expects S&P 500 EPS to reach $306 in 2026, up 12.5% from the 2025 estimate of $272. If that number holds, current valuations look more reasonable. The question is whether companies can deliver in an environment where rate cuts may be slower than expected.
AI capital expenditure. The tech giants aren't slowing down. Combined AI spending from Alphabet, Amazon, Meta, Microsoft, and Oracle is expected to approach $520 billion in 2026. That's real money flowing through the economy—from data center construction to chip purchases to software development.
Goldman Sachs estimates early AI adoption could add 0.4% to earnings growth in 2026 and 1.5% in 2027. Those numbers sound small, but on a $50 trillion market cap, they translate to hundreds of billions in value creation.
Economic resilience. Real GDP is projected to grow above 2% in 2026, supported by labor force expansion and productivity gains. The consumer hasn't cracked despite high rates, and corporate balance sheets remain healthy.
The Risks
Strategists aren't ignoring the downside.
The first half of 2026 could bring a correction if bond yields spike. The 10-year Treasury has been stubbornly high, and any signal that monetary policy will stay restrictive longer could trigger a repricing. With stocks at all-time highs, the asymmetry isn't great.
Midterm election years have historically been volatile. The political calendar adds uncertainty to an already complex macro picture.
And then there's the Fed. Markets are pricing in limited cuts for 2026, but expectations have a way of shifting. If the economy weakens more than expected, rate cuts could accelerate—good for equities. If inflation proves sticky, the Fed stays on hold—bad for equity valuations.
Track Record Matters
Here's the uncomfortable truth: Wall Street forecasts are often wrong.
Goldman Sachs data shows that over the five years from 2020 to 2024, the median year-end S&P 500 forecast missed the actual return by an average of 18 percentage points. In 2022, strategists expected gains; the index fell 19%. In 2023, most were too bearish; the S&P surged 24%.
The consensus has been directionally correct more often than not—stocks tend to go up over time—but the magnitude of the miss can be significant. Use these forecasts as a guide, not gospel.
What It Means for Positioning
If strategists are right, the playbook stays similar to 2024: own quality growth, maintain AI exposure, and don't fight the trend.
But the margin of safety has shrunk. At 6,930, you're buying a market that's already priced for a lot of good news. The 7,629 target implies roughly 10% returns, which is fair but not compelling on a risk-adjusted basis.
For traders, the message is clearer: momentum remains favorable, but position sizes should reflect elevated valuations. The easy gains of the past two years required holding through drawdowns. 2026 may demand the same discipline.
The S&P 500 closed Friday less than 1% below the 7,000 milestone. Whether it reaches 8,000 depends on earnings, the Fed, and whether the AI thesis delivers on its promises. The next twelve months will provide answers.