Wall Street choruses for bullish on US stocks in 2026! With AI and rate cuts resonating, there is a possibility of a four-year consecutive rise, but a high degree of consensus could become a hidden worry.

Approaching the end of the year, institutions have mostly completed their forecasts for the US stock market in 2026. Wall Street's target range for the S&P 500 index in 2026 is concentrated in the 7100-8100 point range, with an average target of 7490 points, representing approximately an 8% increase from Wednesday's closing point. With a high probability of a rise in US stocks this year, if the trend in the US stock market in 2026 aligns with these forecasts, it would be the fourth consecutive year of growth for US stocks. Wall Street generally expects that the artificial intelligence (AI) boom and Fed rate cuts will continue to drive the S&P 500 index higher, and that corporate earnings growth will also support the rise in US stocks. However, they also warn that inflation, high valuations, and trade tensions could still trigger a market pullback. In addition, Wall Street also expects resilience in global economic growth in 2026. According to estimates from various institutions, global GDP growth should be between 2.4% and 3.3%, and US GDP growth should be between 1.7% and 2.4%. Wall Street is generally optimistic about the US stock market in 2026 Several top Wall Street investment banks have already released their outlooks for the S&P 500 index in 2026. Despite differences in target points, there is a general consensus that, driven by the continued AI investment wave, a shift towards loose monetary policy, and the spread of earnings growth, US stocks are expected to continue rising. JP Morgan's stock strategy team, led by Dubravko Lakos-Bujas, has set a year-end target of 7500 points for the S&P 500 index in 2026, and stated that if the Fed continues to implement rate cuts, this benchmark index is expected to exceed 8000 points in the next year. JP Morgan's forecast of the S&P 500 index reaching 7500 points in 2026 is mainly based on an expected 13% to 15% profit growth over the next two years. In their baseline scenario, JP Morgan expects the Fed to cut rates twice more before entering a long pause phase. The bank believes that continued improvements in inflation will prompt the Fed to intensify rate cuts, which will push the S&P 500 index to climb above 8000 points. JP Morgan stated in a client report, "Despite concerns about an AI bubble and valuation pressure in the market, we believe that the currently high P/E ratios accurately reflect expectations of supertrend profit growth, the AI capital spending wave, shareholder returns, and expectations of loose fiscal policy (i.e., the 'Build Back Better Act'). "Furthermore, the profit benefits brought by relaxed regulation and the broadening of AI-related productivity enhancements have not yet been fully recognized by the market." Deutsche Bank has set a year-end target of 8000 points for the S&P 500 index in 2026, and the bank's confidence is based on its expectations of earnings growth "spreading". Deutsche Bank's stock strategy analysts predict that next year, earnings per share for the S&P 500 index will increase significantly by 14% to $320. The bank believes that the growth momentum brought by AI will extend beyond the "Big Seven" of the US stock market to a wider range of market sectors such as financial and cyclical sectors, driving a broader bull market. Morgan Stanley strategist Michael Wilson also holds an optimistic stance, expecting the S&P 500 index to rise to 7800 points in the next year. Michael Wilson believes that the recent market sell-off is nearing its end, and any short-term weakness is an opportunity to position oneself for a long position in 2026. He expects the Fed's rate cuts to provide support for the stock market, while AI technology will drive efficiency improvements in enterprises. His strategy team is particularly bullish on non-discretionary consumer goods, healthcare, financial, industrial sectors, and small-cap stocks. In its 2026 US stock market strategy outlook report, Citigroup predicts a "sustained but volatile bull market" for 2026. The bank sets a year-end benchmark target of 7700 points for the S&P 500 index, based on an EPS expectation of $320, with a target of 8300 points in an optimistic scenario reflecting slightly higher profit growth and valuation levels. In a pessimistic scenario, the target is 5700 points, corresponding to underperformance of fundamentals and compression of valuations. Citigroup believes that tailwinds in the AI field will continue, but there will still be differentiation within the community of enablers and adopters of this technology. The core theme will be the widening of growth beyond this group, encompassing broad participation in various sectors within the S&P 500 index, as well as the rise of US small and mid-cap stocks. UBS's Global Research Department released a report stating that the US stock uptrend driven by AI will continue until 2026, with the S&P 500 index set to reach 7500 points by the end of next year. The core logic is that corporate profits are expected to remain robust, and the tech sector, with high concentration but strong resilience, will continue to contribute to gains. The report also points out that, although there are concerns in the market about the risk of bubbles and the valuation of AI-related stocks, the actual impact of such concerns on the market is expected to be limited. HSBC also sets its year-end target for the S&P 500 index at 7500 points in 2026, expecting the index to achieve double-digit growth for a second consecutive year under the core momentum of AI investments. Nicole Inui, head of stock strategy for HSBC's Americas region, stated that with the support of "macroeconomic stability, easing policy uncertainties, and the AI investment boom," earnings per share for S&P 500 index components are expected to grow by 12%. Barclays expects the year-end target for the S&P... To be continued...