Wall Street banks lift S&P 500 targets for 2026

Major investment banks raised their S&P 500 targets for 2026, with UBS predicting 7,500 and Barclays forecasting 7,400 based on strong earnings growth from technology companies

By Vera Emoghene
Nov 24, 2025 9:51 am
https://rollingout.com

UBS expects the S&P 500 to reach 7,500 in 2026, citing stronger corporate earnings and improving global economic momentum. The investment bank forecasts about 14% earnings growth next year, with technology firms contributing nearly half of that increase. Meanwhile, Barclays raised its year end 2026 target to 7,400 from 7,000, implying roughly an 11% gain from current levels.

Both banks pointed to megacap technology companies and an easing policy backdrop as key drivers. Barclays lifted its 2026 earnings per share forecast for the S&P 500 to $305 from $295, saying technology earnings driven by large cap artificial intelligence leaders may outpace broader estimates.

Two halves to the story

Analysts described 2026 as a tale of two halves, with early economic headwinds easing as consumer confidence and fiscal support improve later in the year. The banks expect the U.S. to lead global equity markets, delivering around 10% total returns next year. Over the next few months, the U.S. and other advanced economies must navigate a soft patch, with tariffs still feeding through to prices and exports.

The index’s advance will be driven primarily by earnings rather than multiple expansion. The contribution from valuation is likely to be a small negative, though persistent inflows could push market multiples modestly higher. Investment strategists noted that the artificial intelligence race remained one of the driving forces of earnings and valuation in the global environment.

Fed policy expected to help

Expected Federal Reserve rate cuts would support valuations, especially cyclical and growth oriented stocks. However, strategists flagged a sharper downturn as the main near term risk. Outside technology, inflation and higher unemployment could pressure consensus earnings estimates. U.S. midterm election years historically weigh on returns as well.

Tariff escalation appears unlikely according to the forecasts, yet some price pressures remain in the pipeline. Consumer sentiment sits at multi year lows despite the optimistic earnings projections. The banks believe better opportunities exist in equities than in credit markets, reinforcing a preference for stocks over bonds heading into next year.

Broadening beyond big tech

The firms anticipate a shift in market leadership by mid 2026, with gains broadening beyond large cap technology names to include cyclical and lower quality stocks. This broadening should occur following a period of consolidation early in the year. Shareholders will be monitoring the rate at which profits grow and whether the big cap wave spills over to other market segments.

While Europe and emerging markets should also deliver decent earnings and returns of about 8%, both banks believe they will mildly underperform U.S. equities. The global economy is poised to accelerate in 2026 as confidence improves and fiscal stimulus gains traction, but the path forward includes obstacles that could disrupt the optimistic scenario.

The bullish forecasts represent a vote of confidence in corporate America’s ability to grow profits despite lingering economic uncertainties. Whether technology companies can maintain their dominance while other sectors catch up will determine if these ambitious targets prove accurate. The next 12 months will test whether earnings growth can justify current valuations and push the market to new highs.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The author and publication are not registered investment advisors and do not provide personalized investment recommendations.