Evercore ISI sets 2026 S&P 500 target at 7,750 on AI revolution lifting 'multiples and society to new heights'

Evercore ISI strategist Julian Emanuel projects the S&P 500 to reach 7,750 by year-end 2026, driven by the artificial intelligence revolution, drawing parallels to the late 1990s Internet boom. While raising his 2025 forecast to 6,250, it remains below current market levels and consensus, signaling potential near-term volatility. Emanuel anticipates market 'scares' and corrections as inevitable in this innovation-driven bull market, advising investors to stay the course and hedge drawdowns, despite a wide 2026 range from a 9,000 AI bubble to a 5,000 stagflation scenario.

Analysis

Evercore ISI presents a structurally bullish long-term outlook for the S&P 500, establishing a year-end 2026 target of 7,750, predicated on the transformative impact of the artificial intelligence revolution. Strategist Julian Emanuel draws a direct parallel to the internet-driven bull market of the late 1990s, suggesting that AI will similarly lift equities, valuation multiples, and the broader economy. However, this long-term optimism is tempered with significant near-term caution. The firm's revised 2025 year-end forecast of 6,250, while an increase from 5,600, remains below both the current S&P 500 level of approximately 6,400 and the street consensus of 6,445, implying an expectation of volatility or a market drawdown in the interim. The analysis acknowledges substantial risk, presenting a wide 2026 forecast range between a bull case of 9,000 (an 'AI bubble') and a bear case of 5,000 (driven by stagflation). Emanuel anticipates inevitable 'scares' and corrections, characteristic of innovation-led cycles, and advises investors to treat these not as sell signals but as opportunities within a 'bucking bull' market.

Key Decisions for Investors

• Investors with a long-term horizon should consider maintaining strategic equity exposure to capitalize on the secular growth trend driven by artificial intelligence, as outlined in the 7,750 target for 2026.
• Given the near-term forecast is below current market levels and the explicit warning of 'scares', it is prudent to prepare for market corrections of 10% or more and consider hedging strategies to manage downside risk.
• Monitor macroeconomic indicators closely, particularly those related to inflation and economic growth, as the primary bear case of the S&P 500 falling to 5,000 is contingent on a stagflationary environment.
• Treat potential market drawdowns as buying opportunities within a structural bull market, aligning with the analyst's guidance to 'Hedge It to Buy It' rather than selling into weakness.