UBS Predicts S&P 500 at 7,500 in 2026, Tech Leads Gains
UBS forecasts the S & P 500 could climb to 7,500 in 2026, driven by robust earnings growth concentrated in the technology sector. Investors should brace for a near term soft patch as tariffs push up prices and weigh on exports, followed by a broadening rally into lower quality cyclicals.
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UBS analysts are betting that the current technology driven bull market still has room to run, projecting the S & P 500 will reach 7,500 in 2026. The firm’s forecast rests on a projection of roughly 14 percent earnings growth, almost half of which it expects to come from technology companies, a dynamic that UBS says will propel equity markets higher even after recent volatility linked to sky high valuations in the artificial intelligence trade.
Arend Kapteyn, UBS’s global head of economics and strategy research, set out the numbers in a client note, writing, "Base case, we see the S & P 500 rising to 7,500 in '26 driven by ~14% earnings growth, nearly half of that from Tech," He added that the global economy should expand in 2026, although near term conditions will be weaker. Kapteyn warned of a "speed bump" over the next four to five months as tariffs raise U.S. prices and reduce export volumes, creating a temporary soft patch before growth reaccelerates.
Analysts at UBS expect the market to shift character later next year as momentum moves beyond a narrow set of megacap technology winners. The firm anticipates an "imminent broadening and strengthening of growth" beginning in the second quarter, which would widen gains into cyclical sectors that have lagged during the technology led rally. That potential rotation carries implications for portfolio positioning, as historically stretched valuations in a few large names could give way to earnings led gains across a broader swath of the market.
Market reactions to the mix of high valuations and tariff risks have been uneven. The artificial intelligence trade came under pressure in the last week, yet certain technology related names posted sharp rebounds, with Palantir Technologies rallying more than 4 percent and 7 percent respectively in recent sessions. Semiconductor names and enterprise software companies such as Broadcom and Oracle also saw intraday uplifts as investors rotated into select winners.
UBS’s call rests heavily on corporate earnings growth returning to a stronger trajectory. If technology firms deliver the outsized profit gains the bank expects, market capitalization will be driven higher even if price to earnings multiples cool modestly. The firm’s scenario implies nearly 12 percent upside from current levels, an outcome that would mark a notable extension of the decade long market advance led by innovation and productivity gains in computing and software.
Policymakers will be a wildcard. Tariff measures that tighten domestic price pressures could force central banks to weigh inflation risks more carefully, complicating the near term outlook. For investors, the message from UBS is procedural: prepare for short run volatility as policy and price transmission play out, and for a potential broadening of gains later in the year as earnings momentum spreads beyond a small number of headline tech names.
