Wall Street Banks Bet on Double-Digit Rally to US Stocks in 2026
Major Wall Street institutions are projecting another robust year for US equities in 2026, forecasting double-digit returns even as investors grapple with anxiety regarding the massive capital expenditures of Big Tech and the possibility of an asset bubble in the artificial intelligence sector.
According to a consensus of nine leading investment banks, the blue-chip S&P 500 is poised to surpass 7,500 points by the end of 2026. This target implies an upside of approximately 10 percent from Thursday’s close of 6,857, following an all-time high of 6,920 set in October.
If realized, this performance would secure the seventh year of double-digit growth in an eight-year span. However, it would also represent a moderation compared to the 16.6 percent rally observed thus far in 2025 and the index's ten-year average.
Despite these caveats, the forecasts suggest that Wall Street believes the market has absorbed last month’s correction—driven by skepticism over elevated AI valuations—and is now pivoting toward optimism fueled by anticipated Federal Reserve rate cuts and President Trump’s fiscal policies.
"There will be some bumps along the way, but we believe that the bull market is intact," noted Morgan Stanley analysts, who have set a price target of 7,800 for the index. They attribute this outlook to a "triumvirate" of supportive fiscal, monetary, and regulatory environments, alongside continued AI momentum, specifically highlighting an estimated $129 billion in corporate tax relief stemming from the administration's recent legislation.
The broader market has staged a recovery following a sharp 15 percent drawdown in April, triggered by the administration's aggressive tariff announcements. This rebound has been largely engineered by the same technology giants that have dominated recent years. Nvidia, now the world's most valuable corporation, has seen its stock price double since its spring lows, becoming the first entity to breach a $5 trillion valuation in October.
Sentiment has been further buoyed by renewed expectations of monetary easing, following dovish rhetoric from central bank officials. Futures markets currently indicate that investors are pricing in three to four quarter-point interest rate cuts by the end of next year.
Among the major banks, Deutsche Bank holds the most bullish stance, predicting the S&P 500 will reach 8,000 points—a growth rate mirroring that of 2025. Binky Chadha, the bank's chief US equity strategist, anticipates that robust corporate earnings will drive returns early in the year and that the rally will eventually expand beyond the technology sector. "Earnings look like they’re broadening out, across sectors, across regions," Chadha observed, adding that his primary concern is that his forecast might not be bullish enough.
Conversely, Bank of America offers the most conservative outlook, projecting the index will rise only to 7,100. Their analysts warn of impending turbulence, noting that the returns on massive AI and data center infrastructure spending have yet to materialize in corporate earnings. Savita Subramanian, head of US equity and quantitative strategy at the bank, cautioned that "for now investors are buying the dream."
Beyond the US, international equities are also forecast to gain ground in 2026, though at a more modest pace than Wall Street. The Stoxx Europe 600 is projected to advance 6.4 percent to approximately 615 points, while Japan’s Topix index is expected to rise 5.6 percent to roughly 3,590.