Key Takeaways
- Evercore ISI projects the S&P 500 will reach 7,750 by the end of 2026 in its baseline scenario, with a potential bull case target of 9,000.
- Artificial intelligence advancements in technology, communications, and consumer-facing sectors underpin the optimistic bull case projections.
- RBC Capital Markets establishes a 12-month price objective of 7,900, suggesting approximately 7.7% appreciation from early May trading levels.
- RBC anticipates market corrections will remain modest at 5–10%, with more significant declines only materializing if economic recession concerns resurface.
- A substantial earnings divergence emerges in both analyses: RBC projects 28% profit growth for AI-centric companies compared to just 6% for non-AI index constituents.
Two prominent investment research firms have unveiled their S&P 500 projections extending through 2026. While both maintain constructive outlooks, they caution that volatility will likely punctuate the upward trajectory.
Evercore ISI Projects Multiple Scenarios
Julian Emanuel, an analyst at Evercore ISI, anticipates the S&P 500 will close 2026 at 7,750 under his baseline projection. However, he assigns a 30% likelihood to an optimistic scenario that could propel the benchmark index to 9,000.
Emanuel attributes the market’s trajectory to a convergence of competing dynamics: a technology sector rally powered by artificial intelligence innovation alongside fundamental shifts in international geopolitical relationships. This confluence, he argues, generates an unusually broad spectrum of potential market outcomes.
Drawing historical parallels, he referenced the economic environments of the 1920s and 1990s, highlighting what he characterized as “conflict-related economic stimulus, expanding money supply, and transformative productivity gains” intersecting with an AI revolution. His forecast suggests productivity advancement could reach 3% annually by decade’s end.
Evercore’s strategic recommendations include purchasing extended-duration call options on its designated “AI Class of 2026” equities and the QQQ exchange-traded fund to capitalize on upside potential. Simultaneously, the firm advocates implementing collar strategies on S&P 500 holdings to mitigate near-term exposure to crude oil volatility and interest rate fluctuations.
Emanuel also noted an inherent constraint within AI technology itself. He observed that large language models typically gravitate toward consensus perspectives and frequently discount tail-risk scenarios. Consequently, sustainable competitive advantages will emerge from specialized industry knowledge and comprehensive workflow integration rather than superficial AI tools adoption.
RBC Capital Forecasts Gradual Appreciation
Lori Calvasina, who leads U.S. equity strategy at RBC Capital, has established a 12-month S&P 500 target of 7,900. This represents roughly 7.7% upside potential from price levels observed in early May.
Calvasina emphasized that the advance won’t follow a linear path. She anticipates intermittent pullbacks ranging from 5–10% but doesn’t foresee more substantial corrections in the 14–20% territory unless economic contraction concerns reemerge.
RBC’s analytical framework rests on what the firm describes as an “AI acceleration, geopolitical deceleration” baseline. Their model projects 28% earnings expansion for artificial intelligence-oriented enterprises in 2027, contrasted with merely 6% growth for remaining index components.
The framework also incorporates a 5% reduction to consensus earnings forecasts and assumes inflation persists near 3.3%, with the Federal Reserve maintaining its current policy stance and 10-year Treasury yields hovering around 4.5%. Should inflation accelerate to 3.8% and prompt Fed rate increases, RBC calculates fair value would decline to the 7,400–7,500 band.
Near-term headwinds identified by the firm encompass earnings revisions linked to conflict-related disruptions, potential profit realization in semiconductor equities, political uncertainty surrounding midterm elections, and the possibility of elevated borrowing costs.
RBC continues favoring growth-oriented equities over value stocks, and maintains its overweight stance on U.S. markets relative to international alternatives.
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