Banking giant updates S&P 500 target for 2026

As the S&P 500 seeks to claim new record levels, a Wall Street banking giant is projecting that the benchmark is likely to surpass 7,500 in 2026.

Specifically, Goldman Sachs raised its outlook for U.S. equities, projecting the S&P 500 will reach 7,600 as corporate earnings continue to expand and artificial intelligence (AI) adoption accelerates across the economy. 

The outlook implies growth of about 11% from the last closing value of 6,827 and appears plausible given the index has already rallied 16% in 2025.

The firm expects S&P 500 earnings per share to climb 12% in 2026 to about $305, followed by an additional 10% increase in 2027.

Productivity gains linked to artificial intelligence are seen as a meaningful contributor to that growth, adding an estimated 0.4% to earnings next year and 1.5% the year after.

At the same time, the banking giant anticipates support from steady revenue growth, easing tariff-related pressures, and sustained profitability among the index’s largest companies.

Mega-cap technology stocks are expected to remain the primary engine of profit growth. Goldman estimates that leading firms, including Nvidia, Apple, Microsoft, Alphabet, Amazon, Broadcom, and Meta, will account for roughly 46% of total earnings expansion in 2026.

Meanwhile, the bank sees improving earnings momentum across the rest of the index, pointing to a gradual broadening beyond Big Tech.

While the outlook remains constructive, Goldman flagged potential risks that could temper gains, including slower-than-expected Federal Reserve easing and pressure on corporate margins.

Even so, the bank maintained that resilient economic conditions and expanding AI-driven productivity should keep U.S. equities on a positive trajectory through 2026.

Wall Street bullish on S&P 500 

At the same time, Morgan Stanley is among the most optimistic voices on Wall Street on the S&P 500, projecting the index will reach 7,800 by the end of 2026. As reported by Finbold, the bank argued that recent corrections reflect valuation pressure and late-cycle positioning rather than weakening fundamentals. 

Its analysts noted that the selloff is nearing exhaustion, making any additional near-term weakness a potential buying opportunity. Expectations of improving liquidity, eventual Federal Reserve rate cuts, and continued earnings expansion underpin this view.

Beyond Morgan Stanley, other Wall Street strategists generally expect the S&P 500 to trade near or above 7,000 over the medium term, though concerns persist over stretched valuations in large technology stocks and the risk of an AI-driven bubble.

Featured image via Shutterstock