It’s that time of year when Wall Street’s top strategists tell clients where they see the stock market heading in the year ahead.
The strategists followed by TKer have year-end S&P 500 targets ranging from 7,100 to 8,000. This implies returns between 3.3% and 16.4% from Friday’s close.
Following three consecutive years of above-average gains, some of these targets may seem aggressive. But historically, targets tend to assume 8% to 10% returns, consistent with the midpoint of this year’s predictions.
Before we move on, I’d once again caution against putting too much weight into one-year targets. It’s extremely difficult to predict short-term moves in the market with any accuracy. Few have ever been able to do this consistently. Also, the market rarely delivers an average return in a given year.
DataTrek’s Nick Colas has pointed out that the standard deviation around the mean annual total return for the S&P 500 is nearly 20 percentage points! In other words, the S&P could return 20 percentage points more or less than the long-term average and still be “consistent with historical norms.”
With that in mind, here are some of what’s driving Wall Street’s views on the stock market for 2026:
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Revenue should benefit from economic tailwinds: While economic growth isn’t expected to be spectacular, it should be bolstered by fiscal stimulus from the One Big Beautiful Bill Act (expected to add 0.9% to GDP), easier monetary policy as the Federal Reserve continues to cut rates, trade policy that’s more friendly than 2025, and more spending in AI capex. (Of course, some sectors are expected to do better than others, but we’re not going to get into that level of detail here.)
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There will be some economic challenges: Inflation is expected to remain above the Fed’s 2% target rate. And labor markets are expected to remain cool as companies focus on keeping costs down by turning to AI for increasingly complex tasks.
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Profit margins are expected to get fatter: Analysts expect already-high profit margins to get even higher in 2026. Importantly, most sectors are expected to see profit margin growth. Since the pandemic, companies have adjusted their cost structures aggressively. This has come with strategic layoffs, consolidated office space, and investment in new equipment, including efficiency-enhancing tools powered by AI. These moves are resulting in positive operating leverage (i.e., the degree to which costs move when sales move). Read more here.
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Earnings growth should be strong: The consensus calls for an impressive 14% earnings growth in 2026. The “Magnificent 7” names are expected to lead the surge, but their growth rate is expected to cool from recent years. Meanwhile, earnings growth rates are expected to pick up broadly in other sectors. Also, it’s worth noting that earnings estimates tend to be pretty accurate.
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Valuations could stay high: The more bullish strategists argue today’s above-average P/E ratios are justified and should persist through 2026. Some even went as far as to use the word “bubble” to characterize their views. Read more here.
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But valuation could be a headwind: The more conservative strategists expect P/E ratios to contract from elevated levels. That means any returns in 2026 would be primarily driven by earnings growth.
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Beware midterm election years: Many strategists note that midterm election years tend to be the weakest of a president’s four-year term. CFRA’s Sam Stovall has the stats: “The intra-year drawdown for mid-term election years since 1946 averaged 18%, which was the highest of all four years of the presidential cycle. In addition, the S&P 500 experienced the weakest average annual price gain, at only 3.8% and rose in price only 55% of the time, versus an average gain of 10.8% and 76% frequency of advance for the other three years.”
In summary: Expanding profit margins are expected to turn modest revenue growth into double-digit earnings growth, which should drive stock prices higher. The magnitude of those price gains will depend on whether or not valuations stay high.
The 2026 S&P 500 price targets 🔮
Below is a roundup of 13 of these 2026 targets, including highlights from the strategists’ commentary.
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BofA: 7,100, $310 (as of Nov. 26): “Multiple expansion and earnings growth both pushed the S&P 500 up 15% this year. In 2026, earnings will do the liſt (we forecast 14% growth, or $310) with about 10pt PE contraction. 7100 implies ~5% price return. In 2025, policy uncertainty stymied broadening, and guidance remained muted. But from here, bonus depreciation should pull forward capex, corporate guidance is 2 to 1 bullish, and sentiment is far from euphoric. Liquidity is full blast today, but the direction of travel is likely less, not more — less buybacks, more capex, less central bank cuts than last year, and a Fed cutting only if growth is weak.”
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Societe Generale: 7,300, $310 (as of Nov. 26): “Fed rate cuts are unfinished business. The One Big Beautiful Bill Act (OBBBA) has front-loaded stimulus, profit margins are widening beyond Tech, and corporate activity is expanding. AI-driven capex is accelerating, and borrowing is up, but leverage remains in check overall. Bottom line: The backdrop is positive for US assets — it’s too early to call the bull run over.”
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Barclays: 7,400, $305 (as of Nov. 19): “1) The AI story keeps rolling, despite recent volatility sparked by capex and financing concerns, as compute demand continues to scale and monetization grows to encapsulate paid users, ads, and enterprise/agents; 2) Fed cuts are constructive for valuations, especially for cyclical/growth equities; 3) easier financial conditions support healthy deal activity; 4) worst is likely past on the tariff front, while US fiscal profile has improved YTD + modest boost from OBBBA; 5) US ‘26 GDP likely sluggish vs. LT trend but better than most DMs, while US equities continue to lead RoW in EPS growth, margin expansion and revisions.”
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CFRA: 7,400 (as of Nov. 24): “Despite favorable GDP and EPS forecasts, 2026 should be volatile, since it is a mid-term election year, especially since a ‘wave’ is at stake (single-party control of the executive and legislative branches). Therefore, as we approach the new year, we advise investors to remain invested but vigilant, focusing on higher quality growth companies.”
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UBS: 7,500, $309 (as of Nov. 10): “[E]arnings expectations and valuations are among the highest in four decades. Industry and style performance suggests an imminent broadening and strengthening of growth. We see that happening but only from Q2 2026, with a speed bump up first as tariffs worsen the growth-inflation mix temporarily. The market should consolidate and high-quality stocks should outperform. From late Q1, we should see a broadening of the rally into lower-quality cyclicals. Base case, we see the S&P500 rising to 7,500 in ‘26 driven by ~14% earnings growth, nearly half of that from Tech. The contribution from valuation is likely to be a small negative.”
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HSBC: 7,500, $300 (as of Nov. 24): “…suggesting another year of double-digit gains mirroring the late 1990s equity boom. Back then, like today, tech is leading, return concentration is high, and a new technology is promising to be transformational. We expect equities to remain supported by the AI-led capex boom. Our colleagues have weighed in on the question: Are we in a bubble? Bubble or not — history shows that rallies can last for quite some time (3-5 years in the dot com/housing boom), so we see more to come and recommend a broadening of the AI trade.”
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JPMorgan: 7,500, $315 (as of Nov. 25): “Despite AI bubble and valuation concerns, we see current elevated multiples correctly anticipating above-trend earnings growth, an AI capex boom, rising shareholder payouts, and easier fiscal and monetary policies. Also, the earnings benefit tied to deregulation and broadening AI-related productivity gains remain underappreciated.”
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Yardeni: 7,700, $310 (as of Nov. 25): “We expect that 2026 will be just another year of the Roaring 2020s, which remains our base-case scenario.”
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RBC: 7,750, $311 (as of Dec. 1): “Investor sentiment may have more room to fall in the near term, but is already at levels sending a contrarian buy signal over the longer term. … Expectations for solid EPS growth plus some modest valuation tailwinds from lower rates can offset the valuation headwinds from uncomfortable inflation in the year ahead. … Bonds shouldn’t scare investors away from stocks. … The anticipated GDP backdrop is a bit of a drag on our stock market forecast. … Fighting the Fed doesn’t make sense.”
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Morgan Stanley: 7,800, $317 (as of Nov. 17): “The capitulation around Liberation Day marked the end of a three-year rolling recession and the start of a rolling recovery. We believe that we’re in the midst of a new bull market and earnings cycle, especially for many of the lagging areas of the index. We think that most of the elements of a classic early-cycle environment are with us today — compressed cost structures that set the stage for positive operating leverage, a historic rebound in earnings revisions breadth, and pent-up demand across wide swaths of the market/economy that were mired in the preceding rolling recession.”
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Wells Fargo: 7,800, $310 (as of Nov. 21): “Our target is driven by our PRSM framework (Profits, Rates, Sentiment, Macro). Profits: +14% YoY for 2026E EPS and +13% for 2027E; Rates: negative due to tight liquidity, but we expect a Fed boost; Sentiment: contrarian Buy signal triggered (SPX +7.5% N3M on avg. & 90% hit rate); Macro: turned positive for the first time since Jan 2025. The overall PRSM score of 0.2 implies +12% return over N12M.”
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Deutsche Bank: 8,000, $320 (as of Nov. 26): “In 2026, we see robust earnings growth and equity valuations remaining elevated. We expect a pickup in earnings growth in 2026 to 14% (from 10% in 2025), taking S&P 500 EPS to $320. Corporate cost-cutting and the labor market remain risks, but for administration policies we expect checks and balances in the run-up to the mid-term elections. At 25x, the S&P 500 trailing multiple is well above the historical average (15.3x) but easily explained by favorable drivers: higher payout ratios, higher perceived trend earnings growth, fewer large drawdowns in earnings, and inflation below its long-run average.”
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Capital Economics: 8,000 (as of Nov. 19): “[W]e suspect that the near-term risks are more about perceived demand for AI, or whether capex is excessive. Our forecast for the S&P 500 to rise to 8,000 by end-2026 implicitly assumes that valuations will rise a lot further before the bubble, if there is one, bursts.”
Two things about one-year price targets 🙋🏻♂️
Most of the equity strategists TKer follows produce incredibly rigorous, high-quality research that reflects a deep understanding of what drives markets. Consequently, the most valuable things these pros have to offer have little to do with one-year targets. This is what we mostly cover at TKer. (And in my years of interacting with many of these folks, at least a few of them don’t care for the exercise of publishing one-year targets. They do it because it’s asked of them or it’s popular with clients.)
So first off, don’t dismiss a strategist’s work just because their one-year target is off the mark.
Second, I’ll repeat what I always say when discussing short-term forecasts for the stock market:
⚠️ It’s incredibly difficult to predict with any accuracy where the stock market will be in a year. In addition to the countless number of variables to consider, there are also the totally unpredictable developments that occur along the way.
Strategists will often revise their targets as new information comes in. In fact, some of the numbers you see above represent revisions from prior forecasts.
For most of y’all, it’s probably ill-advised to overhaul your entire investment strategy based on a one-year stock market forecast.
Nevertheless, it can be fun to follow these targets. It helps you get a sense of the various Wall Street firms’ level of bullishness or bearishness.
I think RBC’s Lori Calvasina said it best: The price target “should be viewed as a compass as opposed to a GPS. It is a construct that helps to articulate whether we believe stocks will move higher and why.”
Good luck in 2026!