HSBC strategists think the S&P 500 can reach seven thousand five hundred points by the end of twenty twenty six. This would be about fourteen percent higher than where it closed on Friday.
The team led by Nicole Inui believes spending on artificial intelligence will stay strong. They think this big wave of AI investment will help balance out worries about a weak or unsure American consumer. They expect company earnings to grow by about twelve percent. They say this will be supported by a steady economy, fewer policy surprises, and ongoing money flowing into AI projects.
In their note, the strategists said that even if some people think the market looks like a bubble, history shows that big rallies can last for years. They pointed to the dot com boom and the housing boom as examples. Because of this, they think the market has more room to grow. They suggest that investors start spreading out their AI-related bets instead of focusing on only a few names.
The HSBC team also said the consumer environment is still shaky. They blamed this on stubborn inflation, a softer job market, and government policies that seem to benefit higher-income households more than others.
They added that tariffs may cause some problems in the short term but should calm down later. However, they expect issues related to immigration to last longer and remain a challenge.