Wall Street analyst predicts S&P 500 to hit 9,000 by 2026 in ‘bubble' scenario

Evercore ISI analyst Julian Emanuel projects the S&P 500 could reach 7,750 by year-end 2026, with a 30% probability of a "bubble scenario" pushing it to 9,000, citing accelerating capital markets activity and landmark leveraged buyouts as catalysts. Despite this bullish outlook, Emanuel warns of potential market pullbacks due to the index trading above key moving averages, recommending hedging strategies like Nasdaq put options, while favoring AI and healthcare sectors. This perspective contrasts with other Wall Street views, as Morgan Stanley sees a more modest 7,200 by mid-2026 with labor market risks, and JPMorgan cautions on valuations post-Federal Reserve easing.

Analysis

As the S&P 500 continues to trade at new highs, Evercore ISI analyst Julian Emanuel has suggested that the index is likely to rise by about 33% by 2026. As of press time, the index was valued at 6,727, up 0.19% for the day, while in 2025, the S&P 500 has surged nearly 50%. According to Emanuel, the S&P 500 could climb to 9,000 by 2026 under a “bubble” scenario, compared with the firm’s base target of 7,750. The probability of this high-end outcome has been raised to 30%, supported by signs of accelerating activity in capital markets following a major leveraged buyout. “SPX YE 2026 PT of 7,750, and increased probability of a Bubble scenario to 9,000 to 30%, [is] reinforced by landmark EA LBO,” Evercore said. Emanuel cited the recent acquisition of Electronic Arts (EA) as a key example, noting its similarity to landmark buyouts in 1988 and 2007, which triggered rapid market rallies but also increased short-term volatility. He emphasized that the S&P 500 currently trades well above its 50-day and 100-day moving averages, signaling potential risks of a market pullback. To manage this risk, Emanuel recommended that investors consider hedging strategies, such as Nasdaq put options. Bullish sectors to watch Despite the caution, he remains bullish on AI-related sectors and highlighted “underowned” healthcare stocks as a tactical opportunity amid easing policy and tariff concerns. Notably, while Evercore projects a bullish outlook for the S&P 500, other Wall Street analysts remain divided. As reported by Finbold, Morgan Stanley’s Michael Wilson sees potential upside, projecting the index could rise to 7,200 by mid-2026, though he flagged risks from weak labor data and a potentially slow Fed response. On the other hand, JPMorgan cautioned that equities may reassess valuations once Federal Reserve easing resumes, creating short-term downside risks. Featured image via Shutterstock Evercore ISI presents a structurally bullish but tactically cautious outlook for the S&P 500, projecting a year-end 2026 base target of 7,750, representing a roughly 33% upside from current levels. The firm has increased the probability of a 'bubble' scenario, where the index could reach 9,000, to 30%. This optimism is underpinned by signs of accelerating capital markets activity, exemplified by a recent landmark leveraged buyout of Electronic Arts (EA), which Evercore likens to similar catalytic M&A events in 1988 and 2007 that preceded market rallies. However, this bullish forecast is tempered by significant short-term risk. Analyst Julian Emanuel notes the S&P 500 is trading well above its 50-day and 100-day moving averages, signaling overbought conditions and potential for a pullback. This view is set against a divided Wall Street, with Morgan Stanley forecasting a more modest 7,200 target by mid-2026 while citing risks from weak labor data, and JPMorgan warning of potential valuation pressure once the Federal Reserve begins its easing cycle. Within this framework, Evercore favors AI-related sectors for growth and identifies 'underowned' healthcare stocks as a tactical opportunity amid easing policy concerns.

Key Decisions for Investors

• Given the tension between a bullish long-term forecast and significant short-term pullback risk, investors should consider maintaining long-equity exposure while actively managing downside risk.
• To mitigate potential volatility stemming from the market's extended position, it is prudent to evaluate hedging strategies, such as the recommended use of Nasdaq put options.
• Consider tactical sector rotations, focusing on long-term growth in AI-related themes and exploring potentially undervalued opportunities in the healthcare sector, which may benefit from shifting policy.
• Investors should closely monitor signals from capital markets, particularly large-scale M&A activity, as well as macroeconomic indicators like labor data and Federal Reserve policy shifts, which competing analyses identify as key risk factors.