So Morgan Stanley’s Michael Wilson just did what Wall Street analysts do best: made a bold prediction that sounds both terrifying and exciting at the same time. He’s bumped his S&P 500 target from 7,200 to 7,800 for the end of 2026. That’s an 18% jump from where we’re sitting today at around 6,600.
Before you roll your eyes and mutter “sure, Jan” under your breath, let’s break down why this isn’t just another analyst throwing darts at a board while blindfolded.
The Bull Market That Wasn’t (But Now Is)
Wilson’s got an interesting take: he thinks the 2023-2024 bull market actually died during that lovely market tantrum we had in early 2024. Remember when everything went sideways in April? Yeah, that. According to Wilson, a shiny new bull market was born from those ashes, and we’re now in the sweet spot of an “early-cycle environment.”
It’s like claiming your relationship ended during that big fight, but then you got back together and now it’s even better. Except with more money involved and fewer awkward text messages.
Show Me the Money (Literally)
Here’s where Wilson gets specific, and honestly, the numbers aren’t terrible. He’s betting on corporate earnings to do the heavy lifting:
- 2025: $272 per share (12% increase)
- 2026: $317 per share (17% gain)
- 2027: $356 per share (another 12% bump)
His reasoning? Companies are getting more efficient (thanks, AI), tax policies might stay friendly, and businesses are finding their pricing power again. It’s like when your favorite coffee shop realizes they can charge $6 for a latte and people will still line up.
Small Caps: The Underdogs’ Moment
Wilson’s also betting on small-cap stocks to finally have their day. The Russell 2000 has been the market’s sad little brother this year, up only 5.8% while the S&P 500 strutted around with its 13% gains. But Wilson thinks 2026 could be small caps’ revenge tour.
Think of it as the financial equivalent of that quiet kid in high school who suddenly becomes really successful and shows up to the reunion in a Tesla.
The Sectors to Watch
Wilson’s crystal ball is particularly bullish on:
Healthcare: Lower interest rates plus more merger mania equals happy times. Biotech especially tends to party hard 6-12 months after the Fed starts cutting rates.
Financials: Because banks love it when rates come down from the stratosphere but aren’t quite at zero yet.
Consumer cyclicals: People buying stuff they don’t need > people buying stuff they do need.
The Reality Check
Look, predicting where the market will be in two years is like trying to guess what you’ll want for dinner next Thursday. But Wilson’s logic isn’t completely bonkers. Corporate earnings have been solid, AI is actually making companies more efficient (not just burning cash), and we might be entering that sweet spot where the economy is strong but not overheated.
Of course, this assumes nothing goes spectacularly wrong between now and then. No pressure, world.