JPMorgan Chase & Co (NYSE:JPM, XETRA:CMC) forecast the S&P 500 could climb to 7,500 by the end of 2026, and potentially exceed 8,000 if the Federal Reserve eases monetary policy more aggressively than expected, according to its 2026 Global Equity Outlook.
The bank’s baseline projection assumes two additional Fed rate cuts and 13% to 15% annual earnings growth for US companies, underpinned by a resilient economy and an investment surge in artificial intelligence technology.
JPMorgan highlighted an AI-driven “capex supercycle” as a key factor supporting elevated valuations.
"Despite AI bubble and valuation concerns, we see current elevated multiples correctly anticipating above-trend earnings growth, an AI capex boom, rising shareholder payouts, and easier fiscal policy," the firm said in a client note published Tuesday. "More so, the earnings benefit tied to deregulation and broadening AI-related productivity gains remain underappreciated."
The firm warned, however, that rapid AI disruption could exacerbate economic inequalities and contribute to volatile investor sentiment in an already K-shaped economy.
JPMorgan’s forecast follows data showing S&P 500 companies grew earnings by 13.4% in the third quarter from a year earlier, according to FactSet. The bank sees continued US growth as a primary engine for global equity gains, alongside easing policy pressures and strong shareholder payouts.
Markets were pricing in an 85% chance of a Fed rate cut next month as of Wednesday morning. JPMorgan said that further easing, coupled with an improving inflation outlook, could lift the index beyond its baseline 7,500 target toward 8,000.