(Udaipur Kiran) – Wall Street is turning increasingly bullish on the S&P 500 as the index climbs to new record highs, with artificial intelligence (AI) driving optimism for continued gains. Evercore ISI strategist Julian Emanuel has raised his 2025 year-end target for the S&P 500 to 6,250 from 5,600 and now forecasts the index could rise as much as 20% to 7,750 by the end of 2026, citing a once-in-a-generation technological shift powered by AI.
AI: The Next Big Catalyst
Emanuel believes rapid AI adoption across industries is set to boost both corporate earnings and valuations, creating broad investment opportunities reminiscent of the 1990s internet boom, but unfolding even faster. He also outlined a bullish scenario in which the S&P 500 could reach 9,000, should an “AI-driven asset bubble” take shape—especially if the Federal Reserve maintains an accommodative stance despite persistent inflation.
The strategist, however, cautioned that corrections of 10% or more remain possible, but described them as buying opportunities within what he sees as a “structural bull market.”
Earnings Outlook Raised
Emanuel raised his earnings per share (EPS) forecasts to $264 for 2025 and $287 for 2026, up from previous estimates, highlighting not only the resilience to global tariffs but also the productivity gains from AI. This outlook is shared by other market players, with Citi maintaining a 6,600 year-end S&P 500 forecast and a full-year earnings outlook of $272.
FactSet data shows that with 98% of S&P 500 companies having reported, Q2 earnings are set to rise 11.9% year-over-year—the third straight quarter of double-digit growth. A large majority (81%) of companies exceeded EPS estimates, with the “Magnificent Seven” tech giants posting 26.6% earnings growth compared to 8.1% for the rest of the index.
Policy and Volatility in Focus
Citi analysts noted that ongoing policy support and strong consumer spending continue to boost earnings momentum. However, recent court rulings have added uncertainty over tariffs, with fewer tariffs potentially easing margin pressures but also affecting federal revenues.
Meanwhile, long-term Treasury yields are edging higher, and markets are closely watching upcoming data and Fed signals for clues about future interest rate cuts. With the Fed’s next decision scheduled for September 17, investor focus remains on monetary policy and upcoming economic reports.
Outlook
While analysts expect bouts of volatility ahead, the consensus among major strategists is that AI-driven growth will be a key force for the stock market in the coming years, keeping the long-term outlook for the S&P 500 positive.
Bhupendra Singh Chundawat is a seasoned technology journalist with over 22 years of experience in the media industry. He specializes in covering the global technology landscape, with a deep focus on manufacturing trends and the geopolitical impact on tech companies. Currently serving as the Editor at Udaipur Kiran, his insights are shaped by decades of hands-on reporting and editorial leadership in the fast-evolving world of technology.
AI Revolution Could Lift S&P 500 to 7,750 by 2026, Says Evercore ISI Strategist
