📈 2026 S&P 500 Outlook: What Wall Street Is Expecting

GAR Capital Research Note – December 2025

As we approach the end of the year, major institutions across Wall Street have begun releasing their 2026 S&P 500 forecasts. While the targets vary, a clear narrative is emerging around earnings growth, AI-driven capital investment, and a broadening economic cycle.

Below is a consolidated look at 12 of the top firms’ 2026 outlooks, their price targets, and the themes they believe will shape next year’s market environment.

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🌐 The Range of Targets

The Street expects the S&P 500 to finish 2026 between:

➡️ 7,100 and 8,000

• Median Target: ~7,500
• Implied Upside: +5% to +15% from current levels

Every major bank expects positive performance, with the bulk of gains coming from earnings growth — not multiple expansion.

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🏦 What the Banks Are Saying

BofA – 7,100 | EPS $310
Earnings do the heavy lifting while valuations contract. Liquidity slows, capex rises, and sentiment is still far from euphoric.

Barclays – 7,400 | EPS $305
AI monetization broadens, Fed cuts help valuations, deal-making improves, and U.S. EPS growth outperforms the world.

CFRA – 7,400
Strong backdrop but higher volatility expected in a midterm election year. Focus on high-quality growth.

UBS – 7,500 | EPS $309
Valuations rich but justified. Market consolidates early, then broadens into cyclicals by late Q1. Tech contributes roughly half of EPS growth.

HSBC – 7,500 | EPS $300
Sees echoes of the late 1990s: AI boom continues, concentration remains high, and rallies can last far longer than people think.

JPMorgan – 7,500 | EPS $315
Elevated multiples reflect the reality of strong earnings, AI productivity, rising payouts, and easier fiscal/monetary conditions.

Yardeni – 7,700 | EPS $310
Sticks with the “Roaring 2020s” theme. 2026 is another year of structural expansion.

RBC – 7,750 | EPS $311
Sentiment is already at contrarian buy levels. Lower rates and strong EPS growth support further upside despite inflation concerns.

Morgan Stanley – 7,800 | EPS $317
The rolling recession is over, and a rolling recovery is underway. Classic early-cycle dynamics taking shape.

Wells Fargo – 7,800 | EPS $310
PRSM model shows +12% expected return, supported by earnings strength, improving macro conditions, and a contrarian sentiment signal.

Deutsche Bank – 8,000 | EPS $320
Strongest earnings estimate on the Street. Elevated valuations justified by higher payout ratios, improved trend growth, and fewer earnings drawdowns.

Capital Economics – 8,000
AI demand and capex risks exist, but valuations likely rise further before any bubble concerns matter.

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📌 Key Takeaways for Investors

1. Earnings Growth Is the Core Driver

Most banks project +12% to +15% EPS growth, with consensus EPS for 2026 clustering around $305–$320.

2. AI Remains the Primary Force Behind Market Expansion

AI-related capex, monetization, and productivity are central to every bullish case.

3. Mild Valuation Contraction Expected — Not a Crash

Even conservative forecasts show earnings offsetting any multiple compression.

4. Midterm Elections Introduce Volatility

Expect more chop, especially in the first half of 2026.

5. Market Broadening Is a Major Theme

Many firms expect participation beyond mega-cap tech, particularly in cyclicals and lagging sectors.

6. No Firms Are Calling for a Reversal in the Bull Trend

The lowest target still implies a positive return year.

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📣 What This Means for You

The institutions agree on one thing: the earnings story is strong, and the cycle still has room to run. But each outlook also highlights meaningful risks — liquidity, politics, capex sustainability, and valuation sensitivity.

At GAR Capital, we are currently reviewing our own models, incorporating:

• historical midterm election patterns
• liquidity cycles
• AI investment trajectories
• corporate earnings sensitivity
• sector-level leadership rotation

Our official 2026 S&P 500 target and full-year outlook will be released before year-end.

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🔔 Stay Tuned, Clients

This research note is part of our preparation.

Your full forecast — including our bull, base, and bear case targets — is coming soon.

Thank you for being part of GAR Capital. The best is ahead.