Deutsche Bank gave its highest growth forecast for the S&P 500 in 2026. What is it expecting?

The S&P 500 index may reach 8,000 points by the end of 2026, Deutsche Bank predicted. Such a target implies growth of about 17% from the current level. The bank's optimism is linked to the ongoing AI boom, which is noticeably reshaping the economy and financial markets. Other major banks such as HSBC, JPMorgan and Wells Fargo are only slightly less optimistic about the outlook, although the risk of an AI bubble has not yet disappeared.

Deutsche Bank in a new forecast set the target level for the S&P 500 index for the end of 2026 at 8000 points, writes Yahoo Finance. The bank expects that capital inflows, share buybacks and steady growth in corporate earnings will support the market's upward movement. According to FactSet, companies in the S&P 500 Index grew profits by 13.4% in the third quarter.

Deutsche Bank's new target implies a rise in the main US stock index by about 17% from its current level of 6812.61 points.

"In 2026, we expect strong earnings growth and continued strong valuations," said Deutsche Bank's strategist team led by Binky Chadha.

Deutsche Bank's forecast was the highest on Wall Street, Yahoo Finance notes. HSBC, for example, puts the S&P 500 at 7,500 points (10% upside potential) by the end of 2026. The bank expects the AI investment cycle to continue to support corporate profits despite pressure on low-income consumers.

"While 2025 was driven by the impact of duties, tightening migration policy and high uncertainty in general - from trade to geopolitics to Fed independence - we estimate 2026 will be marked by uneven economic/market developments," HSBC said in a statement to Yahoo Finance.

JPMorgan also allows for a rise to 7500 with the potential for a move to 8000 if the Fed cuts rates further. The bank expects the regulator to cut them twice more before pausing. The market now estimates the probability of a rate cut at the Fed's December meeting at 85% - versus about 30% a week earlier, according to CME FedWatch data.

"Despite fears of an AI bubble and high valuations, we believe current multiples are justified, with the market laying behind above-trend earnings growth, an investment boom in AI infrastructure, increased payouts to shareholders and softer fiscal policy," wrote JPMorgan chief equity strategist Dubravko Lakos-Buijas.

Morgan Stanley also expects strong momentum: they estimate that the index could end 2026 at 7,800 points (+14%). Strategist Mike Wilson called the situation with the S&P500 "a new bull market", noting that the "floating recession" ended at the beginning of the year, and support from politics and corporate profits remains.

At the same time, more and more analyst teams believe that the next phase of the bull market is not yet over, Yahoo Finance writes. Wells Fargo shares this view and forecasts double-digit growth in stocks over the next 12 months, as well as a target level of 7,800 points by the end of 2026. The bank expects a two-stage rally in 2025: first, the market will play up the "hope for reflation" idea, and in the second half of the year, growth will be accelerated by a new round of the AI boom.

This article was AI-translated and verified by a human editor