This ‘twice in a lifetime' opportunity means the S&P 500 can hit 7,750 by end of next year

Evercore ISI's Julian Emanuel projects the S&P 500 will reach 7,750 by year-end 2026, citing an AI-driven "twice in a lifetime" structural bull market akin to the late 1990s but with broader participation and an accommodating Federal Reserve. He posits that AI's wider societal and industrial impact, unlike the Dot-com era, justifies a 27x earnings multiple on $287 EPS. While Emanuel anticipates a near-term market pullback, he advises investors to buy the dip, expecting a period of "rational exuberance" and significant capital markets activity before any potential bubble.

Analysis

Evercore ISI presents a highly bullish outlook for the S&P 500, introducing a year-end 2026 price target of 7,750, which implies a significant rally from current levels. This forecast is predicated on a 27x price-to-earnings multiple applied to a 2026 EPS estimate of $287, a valuation justified by comparing the current AI-driven market to the internet revolution of the late 1990s, which saw a peak P/E of 28x. Strategist Julian Emanuel argues this is a "twice in a lifetime" technological revolution, but distinguishes it from the dot-com bubble by highlighting broader market participation. Unlike the narrow leadership and negative breadth preceding the 2000 peak, the current rally includes utilities, which supply energy to data centers, and industrials, which facilitate the global AI infrastructure buildout. The thesis is further supported by the expectation of an accommodative Federal Reserve, with Evercore positing that the central bank is unlikely to raise rates before the 2026 midterm elections. Despite this long-term optimism, the firm anticipates a near-term market pullback and notes that the low Cboe Volatility Index makes acquiring downside protection via put options currently attractive. However, any such dip is framed as a buying opportunity before a period of "rational exuberance" and robust capital markets activity fully materializes.

Key Decisions for Investors

• Investors aligned with this long-term bullish thesis should consider using any near-term market pullbacks as strategic opportunities to increase exposure to broad market indices like the S&P 500.
• Portfolio allocation should not be limited to pure-play technology; consideration should be given to ancillary sectors like utilities and industrials that Evercore identifies as critical beneficiaries of the AI infrastructure buildout.
• Given the forecast for short-term 'scares' and the current low-volatility environment, it may be prudent to hedge long positions with cost-effective downside protection, such as put options.
• Monitor Federal Reserve policy and forward guidance closely, as the forecast's reliance on elevated earnings multiples is heavily dependent on the assumption of a persistently accommodative monetary environment through 2026.