Deutsche Bank just dropped the boldest stock-market prediction on Wall Street, based on a fairly simple idea.
The bank’s chief U.S. equity strategist, Bankim “Binky” Chadha, believes the bull market still has legs, but companies beyond the usual suspects (Mag 7) will need to start pulling their weight.
According to a Business Insider report, Chadha forecasts the S&P 500 to reach 8,000 by the end of 2026, nearly 18% higher than current levels (the S&P 500 closed near 6,829 on December 2).
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Here’s how other big banks are mapping out the S&P 500 by 2026.
- JPMorgan: Sees the S&P 500 at 7,500 by end-2026 (nearly double-digit upside), with a bull case above 8,000 if the Fed delivers more rate cuts.
- Morgan Stanley:Targets 7,800 by end-2026 (roughly mid-teens upside), led by robust earnings growth and AI-driven efficiency gains.
- Goldman Sachs: Projects the index to be at around 7,600 by 2026, pointing to low double-digit upside from mid-2025 levels.
- Bank of America: Stays cautious with a 7,100 call for 2026, a 5% upside even as it models nearly 14% EPS expansion.
His argument centers on earnings expansion and growth broadening beyond the tech behemoths that have dominated stock-market gains in the AI era.
Moreover, with AI investment spreading, consumer demand up, and the economy proving more durable than most expected, Deutsche Bank thinks valuations don’t need to fall for the stock market to continue humming along.
Deutsche Bank is projecting a new S&P 500 target for 2026
Deutsche Bank makes Wall Street’s most bullish S&P 500 call
Deutsche Bank’s bull case rests on more than just a headline target.
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The bank is modeling $320 in earnings per share for the S&P 500, implying mid-teens earnings growth driven by a wider swath of index constituents going forward.
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Chadha feels that we saw better breadth during Q3, which continues, making fears of an AI bubble overdone as long as the bottom line matches prices.
Key reasons behind Deutsche Bank’s thesis
- Broadening earnings strength: Chadha’s “main thesis” rests on the fact that genuine soft-landing conditions entail strong earnings contribution stretching beyond the mega-cap tech giants of 2023.
- Valuations can hold or expand: Multiples may be “extremely high,” but strong demand, margins, and balance sheets make them look a lot more cyclical.
- Earnings and healthier positioning offer upside: Equity exposure is roughly neutral at this point, which is why he sees high-single-digit gains if investors look to rotate back to risk-on levels.
- Macro backdrop stays supportive: Another strategist at the bank, Jim Reid, points to a highly conducive macro backdrop, led by “rapid AI investment and adoption,” steady global expansion, and U.S. re-acceleration as trade uncertainty eases.
Broader market quietly heats up
The data backs up Chadha’s claims.
Q3 wasn’t another quarter where a handful of tech giants did all the work.
Related: Cathie Wood dumps $8.46 million in software giant
The latest FactSet figures show S&P 500 blended earnings surged nearly 13%–13.4% year-over-year, with 83% of businesses beating EPS estimates.
For perspective, that’s the highest beat rate since 2021, soaring above the 10-year average of 75%.
Perhaps just as important, nine of the index’s 11 sectors posted strong earnings growth, spearheaded by technology, utilities, financials, materials, and industrials, instead of just Big Tech.
Moreover, FactSet also notes that the other 493 S&P names posted 11.9% earnings growth.
This was just the second time in three years that the rest of the index ended up delivering managed double-digit gains.
In terms of price, a Nasdaq review in late November shows that the S&P 500 Equal Weight Index and the Russell 2000 were both within 1% to 2% of their all-time highs, highlighting that performance broadened well beyond the mega-cap names.
Year-to-date performance of major U.S. indices
- S&P 500:+16.1% year-to-date: It has been a remarkably strong year, with it running comfortably above its long-run 10% average annual return.
- Nasdaq Composite:+21.2% year-to-date: tech is still leading the proceedings, but it’s much tamer compared to the back-to-back 28.6% and 43.4% gains in 2023–24.
- Dow Jones Industrial Average:+11.6% year-to-date: a “good, not crazy” year, but a bit above the classic U.S. large-cap long-term 10% pace.
Related: This defense-AI stock is up 50 percent in 6 months: It’s not Palantir