MW JPMorgan just one-upped the most bullish call on Wall Street for the S&P 500 next year

By Barbara Kollmeyer

The U.S. will remain the 'world's growth engine' in 2026

JPMorgan says the S&P 500 could reach above 8,000 in 2026 under certain conditions.

Wall Street has been throwing in some strong stock-market bets for 2026, but the high-water mark just got higher.

It seemed something of a wow earlier this week when Deutsche Bank rolled out its S&P 500 forecasts, predicting an 8,000 finish for the index next year. Our hold-my-beer call of the day from JPMorgan strategists has just bettered that.

A team led by Dubravko Lakos-Bujas puts their base end-year 2026 target for the S&P 500 SPX at 7,500, with expectations for above-trend earnings growth of 13% to 15% for "at least the next two years." The backdrop for that base call - right around the median of forecasts trickling in right now - is two more early-year Fed rate cuts followed by a pause.

Here's where JPMorgan ups the ante: "However, should the Fed ease policy further (due to improving inflation dynamics), we see greater upside with the S&P 500 surpassing 8,000 in 2026," said the strategists.

That possible higher bar for U.S. stocks is part of a JPMorgan forecast that could almost be described as fearless. In the opinion of Lakos-Bujas and his colleagues, American exceptionalism isn't a question, with the U.S. expected to remain "the world's growth engine," next year, driven by a resilient economy and an AI-driven supercycle.

That supercycle has driven record capex, rapid earnings expansion and "unprecedented" market concentration in AI beneficiaries and quality growth companies - those with strong profit margins, resilient cash flow growth, disciplined capital returns and low credit risks, they note.

One worry over that backdrop has been rising valuations for AI companies, but the strategists defend the 30-times forward price/earnings for the 30 main AI stocks. Those companies offer "stronger earnings visibility, higher pricing power, lower balance leverage, and a consistent track record of returning shareholder capital relative to S&P 470 peers trading at 19 times," they say.

Capex spending, another focal point of investor concerns and market pullbacks at times, should grow by 34% over next year for the AI 30, they say, adding that the AI universe should broaden out.

"Fear of becoming obsolete" (FOBO) is driving companies and governments to invest in the technology, which is helping that AI sector momentum to spread from tech and utilities to banks, healthcare and logistics, said the strategists. They remain overweight on tech media and telecom, utilities and defense, and expect banks and pharma to further outperform, though are neutral on broader financials and healthcare.

Lakos-Bujas and his team are also looking for rising shareholder payouts next year and easier fiscal policy through the One Big Beautiful Bill Act to draw investors. They add that earnings tied to deregulation and broadening AI-related productivity gains remain "underappreciated" by investors.

There is one drawback that all this AI-fueled growth, which is "unfolding within a K-shaped, polarized economy," is creating a winner-takes-all market, say Lukas-Bravos and his team. "In such an environment, broad sentiment measures are likely to remain prone to sharp swings, as we have seen this year and most recently," they say.

And the setup for next year doesn't look much different to 2025, in their opinion, with new extremes in crowding and record concentration in stocks that have dominated this year.

Beyond the dominant AI theme, global strategic resource stocks, such as rare earths and uranium should see continued momentum, given expectations for ongoing U.S.-China competition, U.S. supply chain diversification and AI energy needs. Deregulation should drive renewed momentum for financials, housing supply chain and energy, with regulatory rollbacks boosting growth and deficit reduction. Tariff and trade-sensitive stocks could also present some "tactical opportunities," they say.

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are rising, led by tech, with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y inching up and bitcoin (BTCUSD) modestly higher.

   Key asset performance                                                Last       5d      1m      YTD      1y 
   S&P 500                                                              6765.88    2.25%   -1.81%  15.03%   12.36% 
   Nasdaq Composite                                                     23,025.59  2.64%   -3.37%  19.24%   20.09% 
   10-year Treasury                                                     4.015      -12.70  -6.10   -56.10   -24.90 
   Gold                                                                 4154.8     1.88%   5.41%   57.42%   57.59% 
   Oil                                                                  57.86      -2.61%  -4.14%  -19.49%  -15.86% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Weekly jobless claims are due at 8:30 a.m., alongside a September durable-goods order report. The Fed's beige book of economic conditions will be released at 2 p.m.

Results are coming from tractor-maker Deere (DE).

Urban Outfitters stock $(URBN)$ is surging, boosted by strong third-quarter results and a positive fourth-quarter outlook.

Dell stock $(DELL)$ is rising after the maker of AI and traditional servers on Tuesday boosted its overall revenue outlook.

Autodesk $(ADSK)$ is climbing after the 3D design and software group lifted its sales outlook.

NetApp $(NTAP)$ earnings and revenue beat forecasts, and shares of the computer tech group are climbing.

HP shares $(HPQ)$ are falling after the computer group warned that rising memory-chip costs will weigh on its current year, as it announced a restructuring with 10% of jobs to go.

Betting markets are increasingly pointing to Kevin Hassett as the next Fed chairman.

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The chart

Bloomberg/Coatue

The chart from Coatue shows how the price performance of Google and its AI suppliers and partners , such as Celestica and Lumentum has been tightly correlated with OpenAI's Complex, which includes Nvidia and Microsoft up until November. As Coatue said, "Markets repriced fast." Shares of Google parent Alphabet $(GOOGL)$ have jumped 20% this month, driven by the view that the tech giant's AI momentum could steal chip business away from Nvidia (NVDA), whose shares are down 11% this month.

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   AMD     Advanced Micro Devices 
   GME     GameStop 
   META    Meta 
   PLTR    Palantir Technologies 
   TSM     Taiwan Semiconductor Manufacturing 
   GOOGL   Alphabet 
   AAPL    Apple 
   NIO     NIO 

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-Barbara Kollmeyer

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(END) Dow Jones Newswires

November 26, 2025 06:56 ET (11:56 GMT)

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