JPMorgan hikes 2026 S&P 500 target, but sees hurdles ahead for stocks
Stocks will keep going higher — just not in a straight line, according to JPMorgan. Strategist Dubravko Lakos-Bujas raised his year-end S & P 500 target to 7,800 from 7,200 .
The new forecast implies upside of 5.9%. Lakos-Bujas said stocks are heading into a "'Blue Sky' scenario" as the U.S.-Iran war heads toward a resolution.
On Wednesday, President Donald Trump said Iran assured there won't be tolls on the Strait of Hormuz. "However, it's important to keep in mind that the path upwards will likely be non-linear, as the market will need to clear various hurdles," the strategist wrote to clients.
"Strong back-to-back earnings have reset the bar higher heading into the 2Q season, making it more difficult for companies to significantly surprise to the upside on both earnings and capex." The last two earnings seasons have indeed been strong — with a chunk of that momentum coming from companies linked to artificial intelligence. S & P 500 profits for the fourth quarter of 2025 grew nearly 14% year on year, per FactSet.
In Q1 2026, they skyrocketed by 28.9%. For the second quarter of this year, earnings are expected to have expanded by 22%. .SPX YTD mountain SPX year to date "Moreover, the rapidly increasing equity supply expected over the coming quarters, alongside potentially tighter monetary policy, could constrain equity multiples," Lakos-Bujas said.
Despite these concerns, Lakos-Bujas expects AI spending to continue while U.S. businesses and consumers remain strong — which he thinks will keep equities going higher. "This resilience is occurring despite tariff uncertainty, supply-chain disruptions, and higher energy prices, with AI infrastructure spending, strong liquidity, and a stable but elevated fiscal deficit helping offset these headwinds," he said, adding that buybacks are on pace for another record year.
Lakos-Bujas' new target is tied for the fourth highest among those included in the CNBC Market Strategist Survey . It's just above the 7,789 average.
John Stoltzfus of Oppenheimer and Citi's Scott Chronert have the highest targets on the list at 8,100. Bank of America's has the lowest one at 7,100.
