Wall Street brokerages remain overwhelmingly bullish on the S&P 500 in 2026, with AI-driven earnings growth and resilient corporate profits expected to support equities despite inflation, energy supply risks and economic uncertainty stemming from the Iran conflict. According to Reuters, HSBC and UBS Global Wealth Management have raised their S&P 500 targets above the 8,000 mark, while Barclays increased its forecast to 7,950. The higher targets reflect expectations that strong corporate profitability and continued investment in AI will help sustain equity gains despite elevated geopolitical risks. UBS Global Research and UBS Global Wealth Management are among the most bullish, with targets of 8,100, while HSBC has set the same target. J.P. Morgan, Deutsche Bank, Societe Generale, Goldman Sachs and Morgan Stanley have each set targets of 8,000, with Wells Fargo and Barclays also targeting 7,950. BofA Global Research has set the lowest target among listed brokerages at 7,100, while Jefferies, Canaccord Genuity and BNP Paribas have each forecast 7,500.
Barclays has raised its year-end S&P 500 target to 7,950 from 7,800, representing a 4% increase from the index's latest closing level of 7,636.36. According to LSEG data, 86% of the 492 S&P 500 companies reporting second-quarter results exceeded analysts' estimates, well above the long-term average of 67.5%. The brokerage's head of U.S. equity strategy Venu Krishna cited a 'standout' technology-led earnings season that has strengthened the case for durable, AI-supported profit growth. The new target sits about 4% above Tuesday's close, with Barclays projecting the benchmark will reach 8,800 by the end of 2027, demonstrating confidence in sustained corporate earnings momentum despite various market risks. However, as reported by Reuters, the firm remains conservative on valuations due to doubts over the durability of AI spending, resilient inflation, geopolitical uncertainty and a more hawkish rate outlook, even as recent results point to "standout" tech execution and greater visibility on AI-driven earnings.
The brokerage has increased its 2026 earnings-per-share forecast for the S&P 500 to $365 from $337, reflecting expectations of continued earnings momentum. As reported by Reuters, HSBC has made an even larger upward revision, lifting its year-end 2026 S&P 500 target to 8,100 from 7,650, with head of equity strategy Nicole Inui pointing to strong earnings momentum. HSBC expects S&P 500 earnings growth in the first half of 2026 approaching 40%, with earnings expected to continue expanding at a 25% pace in the second half. The current S&P 500 has risen 11.55% year to date, indicating strong performance despite market headwinds, with U.S. equities edging lower in early morning trading Wednesday but Wall Street strategists continuing to raise year-end targets. Barclays projects that AI investment and healthy economic activity should continue to support earnings momentum in coming quarters. The bank has also upgraded its FY27 EPS estimate to $414 from $389, with the base case assuming 30.8% EPS growth for 2026 and a price-to-earnings multiple of 21.8 times.
Big Tech led the strong Q2 earnings performance, posting 35% EPS growth, up from 30% in the prior quarter, while the rest of the technology sector grew 88%. Within Big Tech, Alphabet and Amazon drove most of the upside surprise, while Meta missed expectations. As reported by Investing.com, S&P 500 headline EPS grew more than 50% year-over-year, or 29.3% excluding one-time items, on sales growth of 13.3%. Barclays estimates that hyperscaler capital expenditure is expected to exceed $1.1 trillion in 2027, representing a 67% year-over-year increase, with Alphabet and Amazon seen as the largest contributors and Meta close behind. The forecasts underscore the importance of AI-driven earnings growth to the bullish outlook, with investors betting that continued spending on AI infrastructure and technology will translate into stronger revenues and profits for companies across the technology sector and beyond. The concentration in AI stocks has been significant, with AI stocks accounting for about 45% of the S&P 500's market capitalization and driving nearly all of the rally, while the US 500 Excluding Artificial Intelligence Enablers Price Return Index (SPXXAI) sits at 3,197.09, a 4.48% year-to-date gain, trailing the broader benchmark by roughly seven percentage points.
Despite the bullish outlook, the conflict in Iran remains a key source of uncertainty that could impact market performance. Higher oil prices and disruptions to global energy flows could push inflation higher, potentially limiting the ability of central banks to ease monetary policy and putting pressure on equity valuations. However, for now, strategists appear to view the earnings boost from AI and resilient corporate performance as sufficient to absorb the potential short-term economic damage from the Middle East conflict. The Wells Fargo Investment Institute expects the S&P 500 to finish between 7,800 and 8,000, while Evercore ISI expects the index to reach 7,750, followed by Seaport Research Partners at 7,800 and RBC Capital Markets at 7,900. The coordinated upgrades from multiple institutions demonstrate strong conviction in the market's fundamental strength, with UBS Global Research, Goldman Sachs, and Citigroup all expecting the S&P 500 to finish the year at or above 8,000. Barclays' 2026 bull and bear cases stand at 8,350 and 6,750 respectively, while the 2027 bull and bear cases are 9,800 and 7,800.
