How the S&P 500 Could Hit 8000 in 2026

A scene from the floor of the New York Stock Exchange on Monday. (Michael Nagle/Bloomberg)

Key Points

• Deutsche Bank forecasts the S&P 500 will reach 8000 by the end of 2026, a nearly 20% increase from a recent 6700.
• Artificial intelligence is expected to drive market gains and productivity, but also increase volatility and potentially weaken employment.
• HSBC projects the S&P 500 will hit 7500 by the end of 2026, anticipating another year of double-digit gains similar to the late 1990s.

The Thanksgiving table hasn’t been set yet, but plenty of strategists are already laying out their 2026 forecasts for the stock market . It could be another bountiful, volatile year.

Jim Reid, global head of macro and thematic research at Deutsche Bank, writes that 2026 will be “anything but dull.” He sees the S&P 500 ending at 8000, nearly 20% higher than Monday’s recent 6700.

That may sound high, given how far and how fast the bull market has already come, but Reid notes that the bank has a strong record in this area over the past decade.

Not surprisingly, Reid writes that artificial intelligence will remain a driving force for the market, as will the resulting productivity gains, but that it is too soon to say who the ultimate winners and losers will be. “In the meantime, markets could swing sharply between boom-and-bust narratives…expect no let-up in volatility,” he says.

AI, he says, is a double-edged sword for the economy, as it has both “the potential to weaken employment further while boosting productivity gains.”

However, he still thinks that the U.S. will avoid a recession. Not only is uncertainty about trade policy likely to fade, but other positive factors will likely be growing. That includes lower effective tariff rates and a boost to incomes from tax cuts. Although not ideal for the deficit, those factors will support consumer spending. He expects earnings growth to accelerate beyond just the usual big tech names as well.

Increasing growth will help bolster the labor market, pushing down the unemployment rate a bit. And with a change in leadership at the Federal Reserve, he also thinks the central bank will continue cutting interest rates, which could end 2026 below 3.5%.

Deutsche Bank thinks that gross domestic product will come in around 2.4% next year, compared with an annual rate of 3.8% for the second quarter, holding steady around that level for the start of 2027. It is upbeat about Europe as well, but more cautious when it comes to Japan.

The firm isn’t the only optimist when it comes to next year. Nicole Inui, HSBC’s head of equity strategy for the Americas, introduced a target of 7500 for the S&P 500 for the end of 2026 on Monday, saying it suggests “another year of double-digit gains mirroring the late 1990s equity boom.”

She, too, sees AI playing a major role. Like Reid, she argues that AI investment will be supportive for stocks, as well as the broader economy, even if consumer spending and the labor market are wobbly.

Inui agrees with other analysts that even if the market is in an AI bubble, it isn’t close to popping. “Bubble or not – history shows that rallies can last for quite some time (three to five years in the dot com/housing boom), so we see more to come and recommend a broadening of the AI trade,” she writes.

Ultimately, she expects many of today’s trends will continue next year. Investment in AI will keep boosting stocks, spending by wealthier people will support the economy as the less well-off economize, and uncertainty about trade will diminish, but remain a factor.

That wouldn’t be a terrible scenario. Even with recent losses, the S&P 500 is up some 13% since the start of the year.

Write to Teresa Rivas at teresa.rivas@barrons.com