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What Wall Street Expects From Stocks in 2026

MarketDash Editorial Team
6 hours ago
Wall Street strategists are projecting S&P 500 targets between 7,100 and 8,000 for year-end 2026, implying returns of 3% to 16%. The consensus view: expanding profit margins will transform modest revenue growth into double-digit earnings gains, though valuations and midterm election dynamics could create headwinds along the way.

It's that special time of year when Wall Street's top minds dust off their crystal balls and tell clients where they think stocks are headed over the next twelve months. Spoiler alert: nobody really knows, but the exercise tells us a lot about what the smart money is thinking.

The strategists worth following have year-end S&P 500 targets for 2026 ranging from 7,100 to 8,000. If you're keeping score at home, that implies returns somewhere between 3.3% and 16.4% from Friday's close. After three consecutive years of above-average gains, some of these projections might sound ambitious. But here's the thing: Wall Street targets historically assume 8% to 10% returns, and this year's predictions land right around that midpoint.

Before we dive into the details, let's get the disclaimer out of the way. One-year price targets are extraordinarily difficult to nail with any real precision. The market is influenced by countless variables, and then there are the curveballs nobody sees coming. Few people have ever consistently predicted short-term market moves with accuracy. Also worth remembering: the market rarely delivers an average return in any given year.

DataTrek's Nick Colas has highlighted something fascinating about this. The standard deviation around the mean annual total return for the S&P 500 is nearly 20 percentage points. Translation: the S&P could deliver 20 percentage points more or less than the long-term average and still be completely within historical norms. That's a pretty wide range.

With those caveats firmly established, here's what's shaping Wall Street's thinking on stocks for 2026:

The Bull Case Framework

Economic tailwinds should boost revenue: Nobody's expecting spectacular economic fireworks, but growth should get some meaningful support. The One Big Beautiful Bill Act is projected to add 0.9% to GDP through fiscal stimulus. The Federal Reserve should continue cutting rates, making monetary policy friendlier. Trade policy is expected to be less contentious than it was in 2025. And companies keep pumping money into AI infrastructure. Different sectors will fare differently, naturally, but the overall environment looks constructive.

Of course, there are challenges: Inflation is likely to stay stubbornly above the Fed's 2% target. Labor markets are expected to remain cool as companies focus relentlessly on cost control, increasingly turning to AI to handle complex tasks that used to require human workers. These aren't catastrophic problems, but they're worth watching.

Profit margins are getting fatter: Here's where things get interesting. Analysts expect profit margins, which are already elevated, to expand even further in 2026. And it's not just a few sectors driving this trend. Most industries are expected to see margin growth. Since the pandemic, companies have fundamentally restructured their cost bases through strategic layoffs, consolidated office space, and aggressive investment in new equipment and AI-powered efficiency tools. The result is positive operating leverage, which is finance-speak for "costs don't rise as fast as sales." That's a beautiful thing if you're a shareholder.

Earnings growth should be robust: The consensus forecast calls for an impressive 14% earnings growth in 2026. The "Magnificent 7" tech giants are expected to lead the charge, though their growth rate should moderate from the breakneck pace of recent years. Meanwhile, earnings growth is expected to pick up more broadly across other sectors. It's also worth noting that earnings estimates, while imperfect, tend to be reasonably accurate.

The valuation debate: This is where strategists split into two camps. The bulls argue that today's above-average price-to-earnings ratios are justified and should persist through 2026. Some strategists even used the word "bubble" in their outlooks, which is always fun. The more conservative crowd expects P/E ratios to contract from these elevated levels, meaning any 2026 returns would come primarily from earnings growth rather than multiple expansion.

Midterm election blues: Many strategists point out that midterm election years tend to be the weakest period in a president's four-year term. CFRA's Sam Stovall has done the homework on this. Since 1946, the average intra-year drawdown for midterm election years has been 18%, the highest of any year in the presidential cycle. The S&P 500's average annual price gain in midterm years is just 3.8%, and stocks rise only 55% of the time. Compare that to the other three years of the cycle, which average 10.8% gains with a 76% win rate. Those are sobering statistics.

The Bottom Line

Here's the investment thesis in a nutshell: expanding profit margins should transform modest revenue growth into double-digit earnings growth, which ought to push stock prices higher. How much higher depends largely on whether valuations stay elevated or compress back toward historical averages.

The 2026 Price Target Roundup

Below are thirteen strategist targets for the S&P 500 in 2026, complete with their reasoning:

Bank of America: 7,100 (earnings per share estimate: $310): "Multiple expansion and earnings growth both pushed the S&P 500 up 15% this year. In 2026, earnings will do the lift (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."

Societe Generale: 7,300 (EPS: $310): "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."

Barclays: 7,400 (EPS: $305): "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."

CFRA: 7,400: "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."

UBS: 7,500 (EPS: $309): "Earnings 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."

HSBC: 7,500 (EPS: $300): "…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."

JPMorgan: 7,500 (EPS: $315): "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."

Yardeni Research: 7,700 (EPS: $310): "We expect that 2026 will be just another year of the Roaring 2020s, which remains our base-case scenario."

RBC Capital Markets: 7,750 (EPS: $311): "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."

Morgan Stanley: 7,800 (EPS: $317): "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."

Wells Fargo: 7,800 (EPS: $310): "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."

Deutsche Bank: 8,000 (EPS: $320): "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."

Capital Economics: 8,000: "We 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 Important Caveats About Price Targets

The equity strategists worth following produce incredibly rigorous, high-quality research that reflects a deep understanding of market mechanics. The most valuable insights these professionals offer have little to do with their one-year targets. That's what we focus on at MarketDash. And here's an open secret: at least a few of these strategists don't particularly enjoy the exercise of publishing annual targets. They do it because clients ask for it or because it's become an industry tradition.

So first, don't dismiss a strategist's entire body of work just because their one-year target misses the mark. Markets are complex, unpredictable systems.

Second, let me repeat the warning that bears repeating whenever we discuss short-term market forecasts:

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 you, 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.

RBC's Lori Calvasina captured it perfectly: 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."

That's the right way to think about these forecasts. They're not promises or guarantees. They're educated guesses that help frame the debate about market direction and reveal what professional investors are thinking about risk and opportunity.

Good luck in 2026!

Back to News

What Wall Street Expects From Stocks in 2026

MarketDash Editorial Team
6 hours ago
Wall Street strategists are projecting S&P 500 targets between 7,100 and 8,000 for year-end 2026, implying returns of 3% to 16%. The consensus view: expanding profit margins will transform modest revenue growth into double-digit earnings gains, though valuations and midterm election dynamics could create headwinds along the way.

It's that special time of year when Wall Street's top minds dust off their crystal balls and tell clients where they think stocks are headed over the next twelve months. Spoiler alert: nobody really knows, but the exercise tells us a lot about what the smart money is thinking.

The strategists worth following have year-end S&P 500 targets for 2026 ranging from 7,100 to 8,000. If you're keeping score at home, that implies returns somewhere between 3.3% and 16.4% from Friday's close. After three consecutive years of above-average gains, some of these projections might sound ambitious. But here's the thing: Wall Street targets historically assume 8% to 10% returns, and this year's predictions land right around that midpoint.

Before we dive into the details, let's get the disclaimer out of the way. One-year price targets are extraordinarily difficult to nail with any real precision. The market is influenced by countless variables, and then there are the curveballs nobody sees coming. Few people have ever consistently predicted short-term market moves with accuracy. Also worth remembering: the market rarely delivers an average return in any given year.

DataTrek's Nick Colas has highlighted something fascinating about this. The standard deviation around the mean annual total return for the S&P 500 is nearly 20 percentage points. Translation: the S&P could deliver 20 percentage points more or less than the long-term average and still be completely within historical norms. That's a pretty wide range.

With those caveats firmly established, here's what's shaping Wall Street's thinking on stocks for 2026:

The Bull Case Framework

Economic tailwinds should boost revenue: Nobody's expecting spectacular economic fireworks, but growth should get some meaningful support. The One Big Beautiful Bill Act is projected to add 0.9% to GDP through fiscal stimulus. The Federal Reserve should continue cutting rates, making monetary policy friendlier. Trade policy is expected to be less contentious than it was in 2025. And companies keep pumping money into AI infrastructure. Different sectors will fare differently, naturally, but the overall environment looks constructive.

Of course, there are challenges: Inflation is likely to stay stubbornly above the Fed's 2% target. Labor markets are expected to remain cool as companies focus relentlessly on cost control, increasingly turning to AI to handle complex tasks that used to require human workers. These aren't catastrophic problems, but they're worth watching.

Profit margins are getting fatter: Here's where things get interesting. Analysts expect profit margins, which are already elevated, to expand even further in 2026. And it's not just a few sectors driving this trend. Most industries are expected to see margin growth. Since the pandemic, companies have fundamentally restructured their cost bases through strategic layoffs, consolidated office space, and aggressive investment in new equipment and AI-powered efficiency tools. The result is positive operating leverage, which is finance-speak for "costs don't rise as fast as sales." That's a beautiful thing if you're a shareholder.

Earnings growth should be robust: The consensus forecast calls for an impressive 14% earnings growth in 2026. The "Magnificent 7" tech giants are expected to lead the charge, though their growth rate should moderate from the breakneck pace of recent years. Meanwhile, earnings growth is expected to pick up more broadly across other sectors. It's also worth noting that earnings estimates, while imperfect, tend to be reasonably accurate.

The valuation debate: This is where strategists split into two camps. The bulls argue that today's above-average price-to-earnings ratios are justified and should persist through 2026. Some strategists even used the word "bubble" in their outlooks, which is always fun. The more conservative crowd expects P/E ratios to contract from these elevated levels, meaning any 2026 returns would come primarily from earnings growth rather than multiple expansion.

Midterm election blues: Many strategists point out that midterm election years tend to be the weakest period in a president's four-year term. CFRA's Sam Stovall has done the homework on this. Since 1946, the average intra-year drawdown for midterm election years has been 18%, the highest of any year in the presidential cycle. The S&P 500's average annual price gain in midterm years is just 3.8%, and stocks rise only 55% of the time. Compare that to the other three years of the cycle, which average 10.8% gains with a 76% win rate. Those are sobering statistics.

The Bottom Line

Here's the investment thesis in a nutshell: expanding profit margins should transform modest revenue growth into double-digit earnings growth, which ought to push stock prices higher. How much higher depends largely on whether valuations stay elevated or compress back toward historical averages.

The 2026 Price Target Roundup

Below are thirteen strategist targets for the S&P 500 in 2026, complete with their reasoning:

Bank of America: 7,100 (earnings per share estimate: $310): "Multiple expansion and earnings growth both pushed the S&P 500 up 15% this year. In 2026, earnings will do the lift (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."

Societe Generale: 7,300 (EPS: $310): "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."

Barclays: 7,400 (EPS: $305): "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."

CFRA: 7,400: "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."

UBS: 7,500 (EPS: $309): "Earnings 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."

HSBC: 7,500 (EPS: $300): "…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."

JPMorgan: 7,500 (EPS: $315): "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."

Yardeni Research: 7,700 (EPS: $310): "We expect that 2026 will be just another year of the Roaring 2020s, which remains our base-case scenario."

RBC Capital Markets: 7,750 (EPS: $311): "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."

Morgan Stanley: 7,800 (EPS: $317): "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."

Wells Fargo: 7,800 (EPS: $310): "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."

Deutsche Bank: 8,000 (EPS: $320): "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."

Capital Economics: 8,000: "We 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 Important Caveats About Price Targets

The equity strategists worth following produce incredibly rigorous, high-quality research that reflects a deep understanding of market mechanics. The most valuable insights these professionals offer have little to do with their one-year targets. That's what we focus on at MarketDash. And here's an open secret: at least a few of these strategists don't particularly enjoy the exercise of publishing annual targets. They do it because clients ask for it or because it's become an industry tradition.

So first, don't dismiss a strategist's entire body of work just because their one-year target misses the mark. Markets are complex, unpredictable systems.

Second, let me repeat the warning that bears repeating whenever we discuss short-term market forecasts:

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 you, 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.

RBC's Lori Calvasina captured it perfectly: 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."

That's the right way to think about these forecasts. They're not promises or guarantees. They're educated guesses that help frame the debate about market direction and reveal what professional investors are thinking about risk and opportunity.

Good luck in 2026!

    What Wall Street Expects From Stocks in 2026 - MarketDash News