Here’s the thing about bull markets—they’re like a really good Netflix series. You want them to keep going, but you’re also wondering when the plot twist is coming.
The bull market that kicked off in late 2022 is now over three years old and still charging. The S&P 500 wrapped up 2025 up about 18%, following back-to-back 24% and 23% years. The Nasdaq? Up 22.3%. Even the Dow got in on the action with a 14.5% gain. Not bad for a market that looked pretty shaky in early 2025.
The Valuation Elephant in the Room
Here’s where it gets spicy. The Shiller P/E ratio—basically the market’s “is this overpriced?” meter—is sitting near all-time highs at 40.59. The regular P/E is 31, the highest since 2020. The Nasdaq 100 is trading at 34x earnings. Translation: stocks are expensive. Really expensive.
But Wall Street isn’t panicking. Most major firms think the party continues in 2026, though they disagree on how wild it gets.
The Bull Case: AI Keeps Printing Money
Oppenheimer is the most bullish, targeting 8,100 for the S&P 500—a 17% jump. Morgan Stanley says 7,800 (12.5% gain). JP Morgan splits the difference at 7,500 (8% gain). Even the bears at Bank of America only see a 2.6% pullback to 7,100.
Their reasoning? Corporate earnings are crushing it. We’re looking at four straight quarters of double-digit earnings growth. Add in AI-driven efficiency gains, potential interest rate cuts, and some market-friendly policies, and you’ve got a recipe for continued gains.
The Valuation Concern
But here’s the catch—valuations are undeniably rich. Bank of America’s Savita Subramanian is watching for a shift from a consumption-driven bull market to a capex-driven one. Translation: the fundamentals need to keep up with the prices, or we could see a reality check.
The Bottom Line
The bull market isn’t dead yet. But it’s also not getting any cheaper. Whether it charges to 8,100 or stumbles to 7,100 probably depends on whether AI actually delivers the productivity gains everyone’s betting on. Stay tuned.
