Wall Street's S&P 500 Estimates For 2026: Morgan Stanley Predicts 7,800, UBS And Citi Predict 7,700

Wall Street is out with its 2026 outlook, and strategists are broadly optimistic stocks can still go higher. Major banks expect AI spending and lower interest rates to keep U.S. stocks climbing, even after years of outsized gains

JP Morgan: Double-digit gains, AI supercycle intact

JP Morgan Global Research is forecasting “double-digit gains” across both developed and emerging markets. The call rests on a familiar but powerful mix of factors, including earnings growth and lower interest rates.

The bank sees the AI-driven "supercycle" as a central force, fueling companies' capital spending and contributing to greater profitability across a wide range of industries — from tech to utilities to banks themselves. At the same time, JP Morgan strategists warn that AI could further intensify market concentration and deepen the already K-shaped economy.

Morgan Stanley: S&P 7,800

Morgan Stanley is among the most optimistic voices on U.S. stocks heading into 2026, projecting the S&P will climb to around 7,800 over the next 12 months — representing roughly a 14% gain.

The firm's bullish stance relies on Federal Reserve rate cuts, sizable corporate tax cuts, and AI-driven efficiency gains. While Morgan Stanley expects volatility along the way, strategists argue the bull market remains intact, with U.S. earnings and cash-flow growth far better positioned than those in overseas markets.

Goldman Sachs: Small caps' moment may finally have arrived

Perhaps the most surprising call comes from Goldman Sachs, with analysts making a case for small-cap stocks to outperform. If this call bears out, it would represent a return to familiar market behavior after years in which mega-cap tech overwhelmingly dominated returns.

Goldman notes that U.S. small caps have outperformed the S&P by an average of roughly 12% following the end of the past Fed rate-cutting cycles. The firm also sees scope for broader market outperformance as AI-driven capital spending — which is now concentrated among a handful of mega-caps — begins to spill over into a wider range of suppliers and beneficiaries. Such a dynamic could help smaller companies capture a greater share of investment dollars, Goldman argues.

Bank of America's more modest call

Bank of America strikes a more restrained tone, arguing that strong earnings growth may not translate into equally strong market gains. Savita Subramanian, the firm’s head of U.S. equity strategy, expects S&P 500 earnings to grow about 14% in 2026, but sees price appreciation limited to roughly 4% to 5%, with a year-end target of around 7,100. The disconnect, she suggests, reflects a potential shift from a consumption-driven bull market toward a more capital-expenditure-heavy one.