2025 has generally been a lucrative year for the benchmark S&P 500 index, which has hit multiple record highs despite periods of market volatility.
With 2026 on the horizon, expectations are that the index could potentially claim the 7,000 milestone driven by the continued dominance of big technology firms.
Notably, at the close of Friday’s session, the index was valued at 6,929, having rallied more than 18% year-to-date.
To assess how the index may trade in 2026, Finbold sought input from OpenAI’s artificial intelligence model, ChatGPT, which outlined several scenarios.
S&P 500 prediction
In its base case, the model projects the S&P 500 will end 2026 at approximately 7,600, implying a gain of about 10% to 12% from late-2025 levels. The forecast reflects expectations of steady earnings growth, resilient valuations, and a gradual easing of monetary policy.
The model anticipates S&P 500 earnings growth of between 7% and 9% in 2026, supported by the monetization of artificial intelligence investments, expanding software margins, and rising adoption of automation across industrial sectors. These forces are expected to help sustain corporate profitability even as economic growth normalizes.
Valuations are projected to remain elevated but manageable, with the index trading at a forward multiple of roughly 20 to 21 times earnings. The outlook assumes a soft-landing environment in which inflation continues to cool and the Federal Reserve delivers gradual interest-rate cuts, reducing equity risk premiums and supporting higher index levels.
The projection also points to a broadening of market leadership in 2026. After a period dominated by mega-cap artificial intelligence stocks, performance is expected to rotate toward financials, industrials, energy infrastructure, and select healthcare segments. The base-case scenario assumes the U.S. economy avoids a recession and does not experience a renewed inflation shock.
S&P 500 bullish outlook
Under more favorable conditions, the model sees a potential upside scenario in which the S&P 500 could rise to between 8,300 and 8,500 by the end of 2026. This outcome would likely depend on faster-than-expected monetary easing, stronger translation of AI-driven productivity gains into corporate profits, and stable geopolitical and credit conditions.
On the downside, the model outlines a bearish range of 6,500 to 6,800. This scenario would likely be driven by persistently high inflation keeping interest rates elevated, pressure on corporate margins, and a valuation reset following a multi-year rally, potentially alongside a mild recession or a sharp risk-off episode.
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