UBS said on Monday that the AI-driven rally in U.S. markets will continue to drive growth for the S&P500, giving the stock index a year-end target of 7,500 for 2026, as per a Reuters report.
The update comes as multiple tech and investment firms chase growth in AI, with anticipation of a bubble among institutions.
CEOs of companies like NVIDIA, Amazon, and Microsoft are split on the issue of whether the emerging sector is actually in a bubble phase but are optimistic about the growth prospects it offers.
“We see S&P 500 earnings growing at 14.4% through 2026. After a couple of slow quarters, growth should begin to accelerate from (the second quarter of next year),” said UBS. Regarding the AI bubble and valuations in the sector right now, UBS has also said that the effect is expected to be small.