The bulls have been on a three-year tear, and honestly, it’s been wild to watch. After a shaky start to 2025—when everyone was convinced the party was over—the market bounced back hard. Now Wall Street is asking the big question: can this thing keep running?
Here’s the deal: the S&P 500 finished 2025 up about 18%, hitting an all-time high around 6,932. The Nasdaq? Up 22.3% to roughly 23,613. Even the Dow got in on the action, gaining 14.5%. These aren’t small moves. For context, the market has been crushing it for three straight years now—24% in 2023, 23% in 2024, and 18% in 2025. That’s the kind of streak that makes investors nervous because, well, nothing goes up forever.
The elephant in the room is valuation. The Shiller P/E ratio is sitting near an all-time high at 40.59. The Nasdaq 100’s P/E is around 34. These numbers are historically chunky. So the real question isn’t whether stocks can go higher—it’s whether they *should* at these prices.
But here’s where it gets interesting. Wall Street’s biggest brains are actually pretty bullish about 2026. Most of them think the S&P 500 keeps climbing.
**Oppenheimer** is the most optimistic, predicting the S&P 500 hits 8,100 by year-end—that’s a 17% gain from here. Their reasoning? The economy is resilient, corporate earnings have been beating expectations all year, and they think that trend continues. Fair enough.
**Morgan Stanley** is targeting 7,800, which would be a 12.5% return. They’re betting on corporate earnings growth fueled by market-friendly policies, Fed rate cuts, lower corporate taxes, and—everyone’s favorite buzzword—AI-driven efficiency gains.
**JP Morgan** is playing it more cautiously with a 7,500 target (roughly 8% gain). They acknowledge valuations are “undoubtedly rich” but argue there are solid reasons to justify them. Profit growth has been impressive, and earnings have been the biggest driver of returns compared to global markets.
Then there’s **Bank of America**, the pessimist of the bunch, predicting just 7,100 by year-end—a measly 2.6% gain. They’re expecting 14% EPS growth but think the market’s upside is limited. Their head of equity strategy is watching for a shift from a consumption-driven bull market to a capex-driven one, which could change the game.
So what’s the real story? The market is expensive, but earnings are actually growing. AI is still a wild card—will it keep fueling gains or will the hype finally catch up to reality? The first four months of 2025 showed us that even bull markets can stumble. Nvidia dropped hard before recovering to finish up 40% for the year.
The bottom line: Wall Street thinks the bull market has more runway, but the margin for error is getting thinner. If earnings growth slows or AI enthusiasm cools, we could see a reality check. But if corporate profits keep accelerating and the Fed keeps cutting rates, the bulls might just keep charging into 2026.
