SP500 Could Skyrocket to 9000 by 2026 or Tumble to 5000 Wall Street Warns

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•  02 Sep 2025
 

Is the stock market on the verge of a historic breakout? According to Julian Emanuel, a senior strategist at Evercore ISI, the S&P 500 index could climb to 7,750 points by the end of 2026, his primary forecast. In an especially optimistic scenario, he adds, the market could even touch the almost unimaginable level of 9,000 points.

The obvious comparison is to the dot-com bubble of the late 1990s: revolutionary technology, eager investors, and a central bank easing credit conditions. This combination, Emanuel argues, could propel markets to new heights—before reality eventually tests them. He describes the current phase as one of “rational exuberance”: sharp gains based on lofty expectations, yet still supported by growth and earnings data. At this stage, any short-term market pullback is seen as an opportunity rather than the end of the rally.

Emanuel also raised his forecast for the end of 2025 to 6,250 points, slightly below current levels. In his view, even a modest correction should not be seen as a bear market, but rather as part of a healthy rally in which volatility is simply part of the journey.

Looking further ahead, Emanuel outlines two scenarios: a central target of 7,750 points for the S&P 500 by the end of 2026 the most optimistic projection currently on Wall Street and in an extreme case, a possible surge to 9,000 points. Both projections rely on the same assumption: the artificial intelligence revolution will continue to drive corporate profits and fuel a prolonged market rally.

The optimism is not only about AI. Emanuel also points to a resilient U.S. economy, expected tax cuts, and reduced uncertainty around international trade. Together, these factors could unleash a “wave of enthusiasm” among investors and push indices even higher. “Artificial intelligence is bigger than the Internet,” he said, noting that just three years after the launch of ChatGPT, its impact is already being felt across industries from manufacturing to healthcare and widespread adoption is only just beginning.

This is not merely a technology trend, but a profitability engine that could transform entire sectors. Both institutional and retail investors are pouring into the industry. After a period of caution, smaller investors are rediscovering their appetite for risk, a pattern often linked with long phases of prosperity, but also with the early stages of a bubble.

A decisive factor will be the Federal Reserve. Markets are pricing in a rate cut as early as this September, followed by up to five more by September 2026. As long as the Fed maintains its easing stance, the markets will continue to enjoy strong tailwinds.

Politics will also influence the outcome: Fed Chairman Jerome Powell’s term ends in 2026, and President Trump would have the power to appoint his successor. Under his influence, the Fed is expected to be slow in raising interest rates before the midterm elections as another supportive factor for markets.

Still, Emanuel warns that risks remain. If economic growth stalls and inflation proves stubborn, the S&P 500 could fall to 5,000 points by the end of 2026 a decline of more than 20%, signaling a clear bear market. Overvaluation is a concern, as many stocks are already trading near record highs. Any disappointing data could spark a sharp sell-off. In short, the market is climbing higher, but the potential fall could be just as steep. Added to this are ongoing tensions with China and other geopolitical risks, any of which could trigger a major market setback.

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