J.P. Morgan sees S&P 500 at 7,500 by end 2026, double-digit gain from here

The benchmark S&P 500 should end next year at 7,500, helped by a resilient U.S. economy and an artificial intelligence-driven “supercycle,” according to Dubravko Lakos-Bujas, J.P. Morgan’s head of global markets strategy.

The index ended Tuesday at 6,765.89. If the S&P 500 finishes next year at 7,500, it would mean a gain of 10.9% from here. The forecast is close to the 7,490 median year-end 2026 target in a new Reuters poll of equity strategists.

The J.P. Morgan outlook, released late Tuesday by Lakos-Bujas and his team, is based on two more interest rate cuts from the Federal Reserve followed by an extended pause, but they noted that if the Fed eases policy further than that, the S&P 500 could surpass 8,000 in 2026.

“The U.S. is set to remain the world’s growth engine,” they wrote.

Lakos-Bujas sees S&P 500 earnings growth of 13-15% for at least the next two years. According to LSEG, analysts expect 2026 S&P 500 earnings growth of 14.3% year-over-year.

“Despite AI bubble and valuation concerns, we see current elevated multiples correctly anticipating above-trend earnings growth, an AI capex boom, rising shareholder payouts, and easier fiscal policy,” they wrote.

Most major global stock indexes should trade higher by the end of 2026 but will struggle to repeat this year’s surprisingly strong performance, according to a Reuters poll of equity strategists, with over half expecting a correction in the coming months.

In April when the White House suddenly imposed sweeping tariffs not seen since the 1930s, the move sent the benchmark U.S. S&P 500 tumbling over 10%. Since then the index has recovered all of its losses and is up around 40% with tech and artificial intelligence stocks leading the charge.

But, as many of those trade restrictions remain in place, there are plenty of risks ahead to the global economy and by extension stock markets, particularly of a potential sell-off in AI shares that could spill into broader market sentiment.

A 56% majority of analysts, 49 of 87, in the November 13-25 poll said a correction in most of the 15 global stock indexes surveyed was likely or very likely, while 38 participants said it was unlikely, including six that viewed such an event as very unlikely.

Back at the start of the year, a slightly smaller majority of analysts had expected a correction to hit stock prices in three months.

“This year’s strong gains will be difficult to replicate ... This suggests slower returns and potentially higher volatility in 2026,” said Angelo Kourkafas, senior global investment strategist at Edward Jones.

Twelve of 15 global stock indexes surveyed will post fewer gains in 2026 than they have so far this year, poll medians showed.

Although India’s BSE, NSE and France’s CAC 40 were expected to notch slightly higher gains over the next 12 months, the projected outperformance was just a modest 1% or less.

Meanwhile, fueled by gains in technology stocks - and especially AI-related companies - the S&P 500, which is up 14% for this year, will rise 11.7% from its current levels to 7,490 by the end of 2026, the sample’s median estimate showed.

However, lofty technology valuations and an exuberance over the AI trade are pressuring stocks as market valuations approach their highest since the dot-com bubble 25 years ago, according to LSEG Datastream.

“Investors appear to have grown complacent - after all, things have gone well so far. But this is precisely where the danger lies for markets. Ignoring risks doesn’t make them disappear,” said Berndt Fernow, deputy director at LBBW.