CFRA’s veteran analyst Sam Stovall predicts the S&P 500 will reach 7,400 next year.

Market Outlook for 2026

Sam Stovall, CFA at CFRA, expressed confidence that the stock market will bounce back from its recent downturn and continue its upward trajectory next year. He projected the S&P 500 index could hit 7,400 by the end of 2026, approximately 10% above Monday’s closing benchmark. While this forecast represents a one-third reduction compared to this year’s growth, it still suggests a fourth consecutive year of double-digit performance.

The surge is largely driven by unprecedented growth in artificial intelligence, with major stock averages expected to rise at least 10% this year, particularly with the S&P 500 up 15% as of Tuesday afternoon. Stovall anticipates an S&P 500 target of 7,000 by the end of 2025, indicating a modest 4% increase by December.

“Unexpectedly for many investors, 2025 could turn out to be another strong year for the U.S. stock market,” Stovall noted in his recently published investment outlook for 2026. He suggested that investors might question the likelihood of a fourth year of double-digit gains, but he remains optimistic. “While we see the bull market lasting through the year, we think the total gains will be lower than average and quite volatile,” he added.

Stovall, who spent nearly three decades at S&P Global before his tenure at CFRA, holds an optimistic view on stocks due to favorable economic growth trends and a recessionary environment that could still be beneficial for the market. He expects inflation to decline again next year, with unemployment rates remaining stable, which leads him to believe S&P 500 operating earnings per share (EPS) will experience double-digit growth.

“For 2025, we’re looking at a projected EPS growth of 10.9%, followed by 13.4% in 2026 and 14.2% in 2027. Across all sectors of the S&P 500, there’s potential for strong performance,” he stated. Notably, sectors like consumer goods, industrials, information technology, and materials are predicted to see significant growth in 2026.

Stovall favors three of the 11 S&P sectors, particularly the financial sector, which he believes will thrive on lower interest rates, improved credit quality, and a rise in merger and acquisition activities. He also has a bullish outlook on tech stocks, highlighting factors like the ongoing transition to digital advertising and notable events in 2026, which include midterm elections, the Winter Olympics, and the World Cup.