JPMorgan: Driven by the AI supercycle, the S&P 500 Index is expected to grow by another 8% by 2026.

JPMorgan Chase released its outlook for the U.S. stock market in 2026, predicting a base target of 7500 points for the S&P 500 index, with an optimistic scenario of breaking through 8000 points. The core driving force behind this expectation is the AI supercycle and the resilient U.S. economy, making the U.S. a global growth engine. This article is sourced from an article by Wall Street Insights, compiled, translated, and written by Foresight News. (Background: Bitcoin becomes the battleground: a silent war between the White House and JPMorgan Chase) (Context: The crypto community resists JPMorgan's report: dumping funds, buying MicroStrategy and Bitcoin support) The core driving force behind this optimistic expectation is the AI supercycle and the resilient U.S. economy. JPMorgan Chase has released its latest outlook for the U.S. stock market in 2026, presenting one of Wall Street's most optimistic forecasts to date, believing that under specific conditions, the S&P 500 index is expected to break through the 8000-point barrier. The bank firmly believes that driven by the AI (AI)-powered supercycle and a resilient economy, the U.S. will continue to serve as the global growth engine. The strategist team led by Dubravko Lakos-Bujas has set the base target for the S&P 500 index at 7500 points by the end of 2026. This forecast is based on the Federal Reserve pausing actions after two rate cuts at the beginning of the year and anticipating corporate earnings to achieve a super trend growth of 13% to 15% 'at least for the next two years.' However, JPMorgan Chase paints a larger imaginative space for the market. The strategists emphasize in the report: 'If the Federal Reserve further relaxes policy due to improving inflation dynamics, we expect to see greater upside potential, with the S&P 500 index surpassing 8000 points in 2026.' This viewpoint distinguishes the bank in the Wall Street forecasting competition, surpassing Deutsche Bank's previous target of 8000 points to become the new high point. This extremely optimistic forecast is based on a firm belief in 'American exceptionalism.' JPMorgan Chase believes that the resilience of the U.S. economy and the continued fermentation of the AI supercycle will allow it to remain 'the engine of global growth' next year, thus providing strong fundamental support for the stock market. The AI supercycle is the core engine. JPMorgan Chase believes that the current AI-driven supercycle is the core of its optimistic outlook. The strategists pointed out that this cycle has driven record capital expenditures, rapid expansion of profits, and created 'unprecedented' market concentration for AI beneficiary stocks and high-quality growth companies. The report defines these high-quality companies as those with strong profit margins, robust cash flow growth, disciplined capital returns, and low credit risk. This technology-driven structural change is reshaping the market landscape. In response to investors' concerns about the high valuations of AI-related stocks, JPMorgan Chase has put forth a defense. The report acknowledges that the forward P/E ratio of the 30 major AI stocks has reached 30 times, but emphasizes that these companies provide 'stronger earnings visibility, higher pricing power, lower asset-liability leverage, and a consistent good record in shareholder capital returns' compared to the S&P 470 index components with a P/E ratio of 19 times. Additionally, regarding capital expenditure issues that once triggered a market pullback, the bank expects that capital expenditure of the 30 major AI stocks will grow by 34% next year. The strategists added that the mindset of 'Fear of becoming obsolete, FOBO' is driving companies and governments to invest heavily in the technology, with this momentum spreading from technology and utilities sectors to industries such as banking, healthcare, and logistics, thus broadening the scope of AI investments. 'Winner takes all' market and potential volatility. Despite the bright prospects, JPMorgan Chase also pointed out a downside. The strategists stated that this AI-driven growth is unfolding in a 'K-shaped differentiated economy,' creating a 'winner takes all' market. This means that some companies achieve tremendous success, while others may fall behind. The report warns: 'In this environment, as we have seen this year and recently, broad market sentiment indicators may still be prone to significant fluctuations.' They believe that the market landscape in 2026 will not differ much from that of 2025, with the dominating stocks exhibiting extreme crowding and record concentrations. In addition to the dominant AI theme, JPMorgan Chase also pointed out other investment areas worth attention, including global strategic resource stocks such as rare earths and uranium, which are expected to continue their growth momentum. Regulatory relaxation is expected to bring new momentum to the financial, real estate supply chain, and energy sectors, while regulatory rollbacks will help promote growth and cut deficits. At the same time, stocks sensitive to tariffs and trade may also provide some 'tactical opportunities.' In terms of industry allocation, JPMorgan Chase maintains an overweight rating on technology, media, and telecommunications (TMT), utilities, and defense sectors, expecting the banking and pharmaceutical industries to outperform the market further. The bank holds a neutral view on the broader financial and healthcare sectors. The strategists also added that the profit growth related to regulatory relaxation and the expansion of AI productivity gains is still being 'underestimated' by investors. Related reports: JPMorgan warns: If MicroStrategy is excluded from MSCI, it may trigger index fund selling pressure of $11.6 billion. Trump pushes for 50-year home loans! Inviting JPMorgan's Dimon and BlackRock to a 'White House secret meeting' to ask Wall Street for help. Wall Street leaders take action: JPMorgan launches dollar-denominated deposit Token, JPM Coin, enabling round-the-clock trading and second-level payments. <JPMorgan: Driven by the AI supercycle, the S&P 500 index is expected to grow another 8% in 2026> This article was first published in BlockTempo, 'The Most Influential Blockchain News Media.'