📈 US Stocks Forecast: What to Expect in 2026
Insight: Wall Street is increasingly optimistic on U.S. equities heading into 2026, and for good reason. Several major banks and research teams see a powerful tailwind ahead, even as risks linger.
Key Forecast Drivers for 2026
1. AI Boom & Productivity Gains
AI isn’t just a hype cycle. Big players like Morgan Stanley and others argue that AI-led capex will supercharge productivity, boosting earnings across sectors.
Federated Hermes specifically points to AI-driven “animal spirits” helping push future earnings higher. federatedhermes.com
2. Strong Corporate Earnings
Analysts expect S&P 500 earnings to grow ~14% in 2026, up from lower expansion rates in 2025. The Motley Fool+1
Bank of America forecasts around +12% earnings growth, citing renewed business investment as a big factor. thewealthadvisor.com
3. Favorable Macroeconomic Environment
Morgan Stanley projects a 14% gain in U.S. stocks over the next 12 months, thanks to a more friendly policy mix: fiscal support + rate cuts + business investment. Morgan Stanley
Federated Hermes expects nominal GDP to pick up strongly in 2026, estimating growth north of 5% assuming inflation stays moderate (~2.5%). federatedhermes.com
4. Valuation & Risk Considerations
The S&P 500’s forward P/E is elevated (~22.7), above its 5- and 10-year averages, suggesting potential valuation risk.
Evercore (Julian Emanuel) highlights a bull-case “bubble” scenario, putting a 25% probability that S&P 500 could jump to 9,000 by end-2026. The Motley Fool
On the flip side, Morgan Stanley’s bear case warns of a slide toward 4,900 if the macro backdrop sours. nasdaq.com+1
📊 Target Levels & Scenarios
Scenario S&P 500 Target
Base Case (Morgan Stanley) ~ 7,800 (≈ +14%)
Morgan Stanley
Moderately Bullish (Evercore) ~ 7,750
The Motley Fool
Bull Case / Bubble (Evercore) ~ 9,000 (25% probability)
The Motley Fool
More Conservative (Goldman Sachs) +6% by mid-2026 vs now
AInvest