UBS sees S&P 500 hitting 7,500 by year-end 2026, fueled by AI and strong corporate profits

Wall Street’s AI-driven rally conscionable got different ballot of confidence.

UBS (UBS) raised its S&P 500 (^GSPC) forecast to 7,500 by the extremity of 2026 successful a enactment connected Monday, citing beardown firm net and gains successful a resilient exertion sector.

According to the bank’s just-published planetary economics and markets outlook, UBS forecasts S&P 500 net maturation of 14.4% twelvemonth implicit twelvemonth successful 2026. About fractional of those gains are expected to travel from the exertion assemblage — a motion the alleged "Magnificent Seven" volition support powering wide firm profits, adjacent arsenic different sectors play catch-up.

The steadfast described the existent setup arsenic a marketplace inactive defined by AI momentum, but 1 that’s starting to broaden beyond megacap tech, a cardinal improvement for sustaining and extending the existent bull market.

“We expect capex to yet widen retired of the constrictive tech assemblage and maturation to go much broad-based,” the study said.

UBS expects that displacement to instrumentality clasp aft a “soft spot implicit the adjacent 4 to 5 months arsenic tariffs proceed to enactment their mode done to prices,” followed by a play of planetary maturation acceleration arsenic concern and user assurance amended and involvement rates fall.

At the aforesaid time, UBS said US maturation is “essentially 1 large stake connected AI,” with concern concentrated successful exertion and information infrastructure.

That presumption has been echoed crossed Wall Street, with economists crediting the roar successful AI spending for keeping the US system retired of a recession adjacent amid higher rates and commercialized tensions.

UBS estimated that specified superior expenditures contributed 78 ground points to GDP maturation successful the archetypal fractional of the year, oregon astir 1.4 percent points erstwhile including software, research, and development.

The steadfast called those figures “eye-watering,” saying the surge successful spending mirrors the exertion build-out of the precocious 1990s, erstwhile a question of concern successful computers, software, and net infrastructure fueled a decade-long roar successful productivity and firm profits.

That surge has besides fueled 1 of Wall Street’s hottest debates — whether today’s AI frenzy is sustainable oregon mounting up for a bubble. Stocks are already trading adjacent 22 times guardant earnings, good supra their five-year average, suggesting overmuch of the bully quality is already priced in.

UBS, however, struck a much measured tone. “The play of a bubble inflating and exploding isn’t inevitable,” the steadfast wrote. “We could conscionable spot the marketplace rising powerfully successful 2026 and past stalling successful 2027. The cardinal is to show passthrough of AI productivity to non-tech companies.”