Forecast
Oppenheimer predicts 19% S&P 500 growth in 2026. Bank of America foresees a lacklustre 4% upside. With Wall Street split on where markets head next, investors may need to look beyond the index for outsized returns.
It’s not always easy to make money in a bull market, but it's hard not to. The S&P 500 hit 36 record highs in 2025, following the 57 new highs in 2024. Investors who bought and held the index – funds like the Vanguard S&P 500 ETF ($VOO) – would have outperformed a fair number of actively managed portfolios.
Things might be different in 2026. And while it’s hard to predict where we’ll land in 12 months, it’s still worth taking stock of what analysts are saying.
The bullish
Oppenheimer’s target S&P 500 level sits at 8,100, implying a 19% gain by the end of 2026. Analysts are basing that on strong EPS growth, driven by AI sector growth pushing profits higher.
JPMorgan’s forecast points to 15% index growth, also underpinned by a positive view on corporate earnings, while HSBC believes the AI trade will broaden beyond the megacaps.
Goldman Sachs sees the index at 7,600, expecting EPS to grow 7% in 2026 and Morgan Stanley foresees a 14% gain for the major U.S. index.
The bearish
Bank of America has Wall Street’s most bearish forecast. The firm’s head of U.S. equity and quantitative strategy Savita Subramanian thinks the index could end at 7,100, implied growth of just 4% from current levels.
Her view is that AI plays, which she calls ‘buy-the-dream’ companies, might be headed for an air pocket in 2026.
The promising plays
Even in a year of mixed forecasts, some companies are showing real spark. AI innovators, chipmakers and cloud leaders could ride tech tailwinds higher. Meanwhile, healthcare and renewable energy firms could outperform even if markets wobble.
Alphabet ($GOOGL) saw the most analyst upgrades in 2026, with 63 price targets raised in the last three months. Micron Technology ($MU) follows closely with 47 upgrades, driven by its critical role in high-bandwidth memory for AI chips from Nvidia ($NVDA) and AMD ($AMD).
Outside AI, upgrades clustered around UnitedHealth Group ($UNH), CVS Health ($CVS) and Centene ($CNC). Those came amid a resurgence in allocation towards the healthcare sector, as investors looked for defensive earnings and more predictable cash flows.
Analysts also flagged clean-energy utility firm NextEra Energy ($NEE) as a strong buy, projecting strong 2026 revenue and EPS growth of 8% on its strong pipeline of wind, solar and battery projects.
The strategy
As we head into 2026, there’s no way to predict where the market will end. But for long-term investors focused on capital preservation, cash generation and weathering volatility, the focus shifts to companies that deliver consistent revenue and earnings.
Stocks tend to move on hype and headlines, but intrinsic value stems from fundamentals. That means real earnings, dividends and business strength.
Legendary investor Benjamin Graham said it best: ‘In the short run, the market is a voting machine but in the long run it is a weighing machine.’
This is not financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
