Key Points
- Artificial intelligence is expected to be the main driver of the stock market in 2026. The S&P 500 is forecast to rise nearly 12% to 7,490 by the end of the year.
- If achieved, this would be the index’s fourth consecutive year of gains.
- Potential risks include surprise inflation, high stock valuations, and trade tariffs.
- The market is also expected to benefit from the Federal Reserve likely easing interest rates.
Wall Street is betting big on artificial intelligence to keep the stock market’s bull run alive through 2026. In their outlook for the year ahead, major global brokerages have identified AI as the central theme of investment strategies, predicting another year of solid market gains.
“We think fears of a collapse in the AI narrative are overdone and expect economic expansion to continue for yet another year,” strategists at Barclays said, capturing the optimistic mood.
A recent Reuters poll shows that analysts expect the benchmark S&P 500 index to climb nearly 12%, hitting 7,490 by the end of 2026. If the market finishes 2025 on a high note, it would mark the fourth consecutive year of gains. Global economic growth is also expected to remain resilient, with most forecasts falling in the 2.4% to 3.3% range.
However, it might not be a completely smooth ride. Analysts are still keeping a close eye on a few potential risks that could cause market corrections. These include unexpectedly high inflation, stocks getting too expensive, and the return of trade tensions and tariffs.
Despite these risks, the general feeling is positive. Most believe that the powerful combination of the AI boom and an expected easing of U.S. Federal Reserve interest rates will be enough to keep the market moving forward.
The message from Wall Street is clear: while there are potential bumps in the road, the AI revolution is expected to continue driving the market to new heights.
