UBS forecasts the S&P 500 could rise to 7,500 by mid-2026, driven by AI advancements, strong earnings, and consumer spending. The bank expects U.S. equities to remain supported as the Federal Reserve eases its cycle without leading to a recession.<\/p>\n
AI is considered a key structural driver, with companies like Intel and Oracle already benefiting. UBS anticipates global AI capital expenditure to increase by 67% to USD 375 billion in 2025 and 33% more to USD 500 billion in 2026. This growth is due to strong demand for computing capacity and improved monetisation trends.<\/p>\n
Earnings momentum is strong, with S&P 500 corporate profits rising 8% in Q2, surpassing the 5% forecast. Nearly 80% of firms exceeded sales estimates, while the median EPS beat was 4.3%. UBS expects S&P 500 EPS to reach USD 270 this year, an 8% increase, and USD 290 by 2026, up 7.5%.<\/p>\n
Consumer spending supports the economy, with retail sales rising for three consecutive months, beating August expectations. The labor market shows some weakness, yet household and corporate balance sheets remain healthy. Deregulation efforts might further bolster growth.<\/p>\n
Despite high valuations, a period of consolidation is anticipated. UBS\u2019s base scenario predicts the S&P 500 will reach 6,800 by June 2026, and a bullish scenario could see it hit 7,500. The bank suggests increasing exposure during market dips, with a focus on IT, financials, healthcare, communication services, and utilities.<\/p>\n
The overall market view remains positive, pointing toward significant gains into mid-2026. However, given the strong run-up we have already seen this year, a period of consolidation or a slight pullback is likely in the coming weeks. This suggests traders should look to use any market dips as buying opportunities, perhaps by selling cash-secured puts on strong-performing sectors.<\/p>\n
Artificial intelligence continues to be the main structural driver, and recent data confirms this powerful trend. A September 2025 industry report showed global AI capital expenditure is on pace to exceed $380 billion this year, validating the massive investment cycle. Therefore, derivative positions should maintain a bullish bias on key technology names that are central to this build-out.<\/p>\n
Corporate earnings also provide a strong pillar of support for the market. Following the impressive 8% profit growth we saw in the second quarter of 2025, early pre-announcements for the third quarter are tracking well ahead of analyst estimates. This ongoing earnings strength should help cushion the market against any significant declines.<\/p>\n
The macroeconomic backdrop is also favorable, with consumer spending holding up well. The most recent retail sales data for August 2025 showed a healthy increase, beating expectations and calming fears of a slowdown. This resilience, alongside the two interest rate cuts the Federal Reserve delivered earlier in 2025, keeps the economic environment supportive for stocks.<\/p>\n
Still, we must be mindful that valuations are stretched, with the S&P 500\u2019s forward price-to-earnings ratio now at 22, well above its historical average. This high valuation could create short-term volatility and makes outright long call purchases risky. A more prudent approach for the coming weeks would be using bull call spreads to capture further upside while clearly defining risk.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" UBS sees S&P 500 hitting 7,500 by 2026, driven by AI growth, earnings strength, and spending.<\/p>\n","protected":false},"author":62,"featured_media":16986,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-31135","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/31135","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=31135"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/31135\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16986"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=31135"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=31135"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=31135"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}