Wall Street Analysts Have Given the Most Buy Ratings Since 2022. It’s a Sign.

S&P 500 stocks trade at nearly 22 times forward earnings. (NYSE)

Wall Street analysts have been getting more and more bullish on stocks. It could be a sign the market is near its top.

Wall Street’s sell-side analysts are a famously optimistic bunch. Typically the number of stocks they label buys far outstrips the number they tell readers to hold or sell.

Critics complain they are biased—offering rosy views to help their firms’ investment banking arms win more business. A more charitable view is they tend to follow companies they like and that many would-be holds and sells simply don’t get covered.

Either way, analysts’ overall optimism has ratcheted up to levels not seen since 2022—just before that year’s bear market. In June, 56.4% of analyst stock ratings were buys, according to a report Monday by researcher DataTrek. That’s up from around 53.6% late last year.

Over the past three months the share reached its highest level since early 2022. That year it peaked at 57.5% in February, right before soaring inflation sent stocks tumbling into bear market territory.

The share bottomed at 53.2% in February 2023, then hovered between 53.5% and 55.5% until taking off in earnest this spring, DataTrek data show.

Much like when money pours into stock mutual funds, analysts’ excessive optimism can be a contrarian indicator.

“Like many investors, Wall Street analysts become cautious at bottoms and brave at tops,” wrote DataTrek analyst Nicholas Colas. “This group of investment professionals fall prey to all the same mental pitfalls as any other market participant.”

There are plenty of reasons to be cautious. While the S&P 500 was on pace Monday to close out the first six months of 2025 at a record high, many of the problems that sent stocks down nearly 20% in February aren’t resolved, including high valuations, a softening economy and policy uncertainty.

S&P 500 stocks trade at nearly 22 times forward earnings—another sentiment indicator higher than at any time since the end of the last bull market.

Meanwhile, the U.S. economic outlook remains relatively soft, with hiring slowing and unemployment claims on the rise. While President Donald Trump appears to have backed away from his most aggressive trade proposals, new deals have not yet been set and negotiations face another significant deadline July 9. And the Senate is still debating a bill that could lower tax rates but also add trillions to the national debt.

It is worth noting that not all stocks that sell-side analysts love are near their market tops.

DataTrek also included a list of the 10 S&P 500 stocks with the highest shares of buys, all above 90%. The list included two Magnificent 7 members— Amazon and Microsoft —along with market darlings Walmart and Boston Scientific, both of which are up around 40% in the past 12 months.

At least two stocks on the list have share prices that are down in 2025: Diamondback Energy and Targa Resources. The well-regarded energy companies have been hurt by sliding oil prices.

Write to Ian Salisbury at ian.salisbury@barrons.com