S&P 500 in 2026: What Wall Street’s Predicting

After another year of strong gains, Wall Street is now turning its attention to the S&P 500 in 2026—and the early predictions are leaning bullish. With the index trading near record highs and big tech continuing to dominate headline performance, some of the largest brokerages expect that the S&P could climb even higher next year. But are these forecasts realistic, or are analysts overlooking risks beneath the surface?

How Is the S&P 500 Doing?

The S&P 500 continues to do well as we close in on the end of 2025. Trading near record levels, the index is up almost 16% year to date and 13.2% on an annual basis. Of course, the S&P 500 has faced some volatility, including a big 12%+ drop in April following U.S. President Donald Trump’s announced global tariffs.

Still, the index has managed to post a pretty strong year; far better than the average 10.5% annual gains since its introduction in 1957. The S&P 500 has also fared much better in 2025 than analysts were expecting.

Goldman Sachs and Morgan Stanley both predicted that the S&P 500 would finish 2025 at 6,500. Barclays was a little more bullish, forecasting that it would close out 2025 at 6,600. The most bullish was Deutsche Bank, with a 2025 S&P 500 target price of 7,000.

The index is currently at 6,815; well above calls from Goldman, Morgan Stanley, and Barclays. And, with a few weeks left in the year, there is still a chance for the S&P 500 to hit Deutsche Bank’s lofty target.

S&P 500 in 2026: How Will the Index Perform?

Predictions on how the S&P 500 will do in the coming year are starting to trickle in. So far, analysts are bullish on the index, expecting it to hit fresh highs over the next four quarters.

Deutsche Bank is, once again, the most bullish on the S&P 500, projecting that the index will finish 2026 at 8,000. This prediction represents upside of approximately 17% from current levels.

Morgan Stanley remains bullish on U.S. stocks and expects the index to hit 7,800 by end of 2026. Britain’s HSBC sees the S&P ending next year at 7,500, with most of the strength coming from artificial intelligence (AI).

Are Brokerages Too Bullish on the S&P 500?

The S&P 500 is an index that tracks the performance of 500 leading companies listed on stock exchanges in the U.S. But not all stocks are created equal. The S&P 500 is weighted by market cap, meaning that the “Magnificent Seven” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) have more influence on the performance of the S&P 500 than smaller companies do.

While the Magnificent Seven stocks are doing well, if you remove them from the index, the remaining “S&P 493” paints a different picture.

Since 2019, the S&P 500 has rallied a whopping 1,059%. However, If you strip out the Magnificent Seven, the index has advanced a less impressive 132%.

In 2025, big tech and AI companies have climbed 19%, with blue-chip stocks up 12% and small-cap stocks inching up six percent.

For 2026, big global brokerages remain bullish on the S&P 500; many of them are citing strong corporate earnings and AI as providing the primary fuel for the gains to come.

On the earnings front, U.S. stocks continue to perform well. With 95% of S&P 500 companies reporting actual results, 83% have reported a positive earnings-per-share surprise and 76% have reported a positive revenue surprise.

For the third quarter of 2025, the blended (year-over-year) earnings growth rate for the index is 13.4%. Should 13.4% end up being the actual growth rate for the quarter, it would represent the fourth consecutive quarter of double-digit earnings growth for the S&P 500.

With so much of the index concentrated on the Magnificent Seven, the S&P could experience a big tumble should the AI bubble burst. Not all stocks are tethered to the Magnificent Seven or AI companies, and these stocks could be some of the biggest winners in 2026.

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