US equities could climb another 20% by the end of 2026, fueled by what strategists at Evercore ISI describe as a transformative wave of artificial intelligence adoption.
The forecast, issued in a note by the firm’s chief equity and quantitative strategist Julian Emanuel, sees the S&P 500 reaching 7,750 points by the end of next year.
The projection underscores the growing belief on Wall Street that AI is reshaping corporate earnings and valuations.
Emanuel described the shift as “a technological revolution lifting stocks, multiples and society to new heights.”
The outlook builds on the S&P 500’s nearly 10% advance so far this year and a string of record highs over the past four months.
AI seen as key driver of earnings
According to Evercore ISI, the impact of artificial intelligence has already helped earnings exceed expectations, even amid uncertainties around tariffs and policy.
The firm highlighted the second quarter as delivering “double-digit growth and broad upside surprises,” suggesting AI-related gains are becoming a defining feature of corporate performance.
The surge in investor optimism has been particularly evident in technology stocks.
Companies such as Nvidia, Meta Platforms, and Microsoft have each gained more than 20% this year, cementing their positions as leaders of the AI-driven rally.
“AI is ‘bigger’ than the Internet,” Emanuel and his team wrote, arguing that its influence has touched all sectors of society and industry within just three years, even though widespread adoption is only beginning.
Bull and bear scenarios
While the base case targets 7,750 for the S&P 500 by 2026, Evercore ISI acknowledged that outcomes could vary widely depending on broader economic and policy conditions.
In a bullish scenario, the strategists see the index climbing as high as 9,000 points if consumer, business, and investor confidence accelerate in tandem.
Such a move would represent a sharp surge in what Emanuel described as “animal spirits” driving markets higher.
On the downside, a more bearish outcome could take the S&P 500 down to 5,000 points if inflationary pressures persist and economic growth falters.
This range underscores the uncertainty facing markets despite the strong momentum seen in recent months.
Revised near-term targets
Alongside the long-term forecast, Evercore ISI also updated its near-term expectations.
Emanuel now sees the S&P 500 ending this year at 6,250 points, which is lower than Friday’s close of 6,460.
The year-end estimate is slightly below the 6,370 average target among strategists tracked by Bloomberg.
For 2025, Emanuel raised his outlook, though details of that forecast were not disclosed in the note.
Overall, the revised targets reflect both optimism about AI’s long-term potential and caution around shorter-term economic risks.
US equity markets were closed on Monday for a public holiday, but investors will soon turn their attention to economic data and Federal Reserve commentary for signs of how monetary policy may evolve.
For now, Evercore ISI’s call represents the most ambitious S&P 500 forecast on Wall Street, with AI at the centre of the case for further gains.
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