Morgan Stanley firmly bullish on US stocks: strong earnings support bull market, S&P 500 expected to rise another 16% to 7800 points next year.

Morgan Stanley's Chief U.S. Stock Strategist, Michael Wilson, has issued one of the most bullish views on U.S. stocks. He predicts that with strong corporate earnings support, the S&P 500 index will rise by 16% in the next year. Michael Wilson expects the S&P 500 index to trade near 7,800 points by the end of 2026. This target is among the highest levels among various Wall Street strategists, and also implies that the index will achieve double-digit growth for the fourth consecutive year. Data shows that the S&P 500 index has surged 14% so far this year, following over 20% gains in the previous two years. In a report, Michael Wilson stated, "We are in a new bull market and earnings cycle, especially for many sectors that have lagged behind in the index." The strategist forecasts that the earnings per share of S&P 500 index constituents will grow by 17% and 12% over the next two years. He mentioned that stronger pricing power of companies, efficiency improvements from artificial intelligence, loose tax and regulatory policies, and stable interest rates are all supportive factors. At the same time, Michael Wilson also warned that if the Federal Reserve maintains a more hawkish stance than expected, it could pose short-term risks. He added that in the long term, an "overheated" economy could reignite inflation. It is worth mentioning that Michael Wilson was one of the few forecasters who maintained a bullish view even after the widespread market decline in April due to President Trump's implementation of extensive tariffs. His judgment eventually proved to be correct - as trade tensions eased, the S&P 500 index rebounded to record highs. In a widely watched investor survey this year, this strategist was named the second best portfolio strategist, second only to Michael Kantrowitz, the chief investment strategist at Piper Sandler. As the tumultuous year approaches its end, the U.S. stock market is nearing historical highs driven by third-quarter corporate earnings that far exceeded expectations. Despite doubts in the market about AI trading and high valuations, and the risks brought by the longest government shutdown in U.S. history, investors remain confident in economic growth. Recently, Dan Ives, the technology research director at Wedbush Securities, described the current market's nervousness about AI trading as "short-sighted behavior" and asserted that tech stocks - the main driver of the U.S. stock market rise in the past two years - will continue the bull market for at least another two years. This tech bull pointed out the strong demand for semiconductor ETFs in the market, emphasizing that "since June, we have seen demand increase by about 30%." He described the current environment as a "capital expenditure supercycle," considering it as the early stage of a technological revolution, and stated that investors are only in the "second or third phase of the AI revolution." He defended the significant capital expenditures of large tech companies, explaining, "For every dollar of capital expenditure they invest, they will receive a return of $8 to $10 in the coming years." Jeff Krumpelman, Chief Investment Strategist and head of the stock department at Mariner Wealth Advisors, also believes that the recent volatility in tech stocks is more about profit-taking and shutdown-induced fluctuations, rather than a substantial shift in AI or profit fundamentals. The strategist emphasized that early-stage AI applications remain a strong and multi-year theme, and that the current volatility should not be compared to the bursting of the dot-com bubble era. He said, "This is a real trend. Artificial intelligence is still in its early stages, and the future looks promising, not a repeat of the 2000 dot-com bubble." However, there are still cautious voices on Wall Street. Peter Oppenheimer, the Goldman Sachs strategist who accurately predicted that U.S. stocks would underperform other regional stock markets this year, forecasts that U.S. stocks will continue to lag behind other major global markets in the next decade. The strategist predicts that the S&P 500 index will have an annualized return of 6.5% over the next ten years, the weakest performance among all regions; emerging markets are expected to be the strongest, with an annualized return of 10.9%.