UBS predicts that the S&P 500 index, representing the most capitalized companies in the US, will rise to 7,500 points next year, from around 6,728 currently. According to analysts at the Swiss investment bank, the American Blue Chips index will be driven by earnings growth, estimated at around 14.4%, of which almost half will come from technology stocks.
The double side of the coin
The forecast reflects what UBS calls a “tale of two halves” for the global economy. The investment bank in fact expects headwinds in the short term, which will give way to stronger growth later in 2026. For UBS analysts, the global economy “after a couple of slow quarters, growth should start to accelerate from the second quarter of next year” thanks to improving confidence and increased fiscal stimulus.
However, over the next 4-5 months, the United States and other advanced economies will “face a period of weakness,” due to the effect of tariffs, which continue to impact US prices and exports.
US stocks in pole position
Experts at the investment bank expect US stocks to lead global performance, with market returns of around 10% next year.
Contribution to the brilliant performance of the S&P 500, which is already approaching 7,000 points, driven by investor optimism about artificial intelligence, solid corporate profits and expectations of falling interest rates, will come primarily from earnings rather than valuation expansion.
If the USA leads the rally, Europe and the Emerging Markets will defend themselves, recording “fair profits”. In particular, UBS is looking with some interest at China and the yuan area.
Rally driven by artificial intelligence
The market rally will continue to be driven by technology stocks, especially those related to artificial intelligence, such as Nvidia, Microsoft and Alphabet, thanks to AI-related investments fueling record levels of capital spending. But UBS expects the rally to extend beyond large-cap technology stocks by the second quarter of 2026. “We should see an extension of the rally into lower-quality cyclical stocks,” the investment bank points out.
The expansionary policies of central banks
UBS points out that improving confidence, falling real interest rates and a pick-up in credit growth are creating room for further monetary policy easing by emerging market central banks.
UBS also noted that the U.S. dollar and Treasuries’ loss of safe-haven status to German bunds, gold and European axis currencies could reverse if inflation in the world’s largest economy falls sharply in the second half of 2026.
