UBS (UBS) analysts are upbeat on U.S. equities, stating that the market backdrop remains supportive thanks to resilient economic growth, lower interest rates, and continued strength in artificial intelligence (AI) investment. The bank reiterated its “Attractive” view on U.S. stocks, arguing that the forces driving the market higher in 2025 should continue well into 2026.
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Strong Targets for the S&P 500
UBS projects the S&P 500 Index (SPX) will reach 7,300 by June 2026 and 7,700 by December 2026, signaling confidence that the current rally has further room to run. Currently, the SPX is trading at 6,824.
The bank’s earnings outlook reflects similar optimism. UBS forecasts S&P 500 EPS of $277 in 2025, an 11% increase, followed by $305 in 2026, another 10% gain. The firm argues that this pace of earnings growth is consistent with a healthy economic backdrop and ongoing boom in AI investment.
Policy Tailwinds Expected in 2026
Looking ahead to 2026, UBS expects the environment to remain supportive. The bank sees the odds of a rate hike as “very low” and anticipates profit growth near 10%.
The firm also pointed to potential fiscal and monetary boosts in 2026. Lower taxes on tips and overtime, a higher federal deduction for state and local taxes, and the impact of recent Fed rate cuts could all provide additional support for consumers and businesses, helping extend the market’s upward trajectory.
Risks Remain, but UBS Sees Them as Manageable
UBS flagged three key risks to its bullish outlook, which include profit disappointment, higher-than-expected inflation, and signs of over‑investment in AI infrastructure.
However, the bank noted that the likelihood of these risks materializing is “relatively low.” In its base case, the forces currently lifting the market “should remain in place, pushing stocks higher in 2026.”
What Stocks Are Best to Buy Right Now?
Heading into 2026, we use the TipRanks Stock Comparison tool to see how Wall Street analysts are rating some of the popular stocks, such as Meta (META), Amazon (AMZN), Alphabet (GOOGL), Nvidia (NVDA), Alibaba (BABA), Tesla (TSLA), AMD (AMD), and Apple (AAPL), and which stock they believe has the strongest upside.
