JPMorgan is entering the new year with high hopes for the stock market. Strategist Dubravko Lakos Bujas set a target for the S&P 500 at 7,500 at the end of 2026, citing double-digit profit growth and expectations for two more rate cuts from the Federal Reserve “following an extended suspension.” Lakos Bujas’ forecast suggests a 10.9% rise from Tuesday’s close. That would push the S&P 500 index to record levels beyond 2025, when it was already strong. The benchmark is up 15% since the beginning of the year as investors flock to artificial intelligence stocks. AI stocks have taken a hit recently due to valuation concerns, but most remain significantly higher since the start of the year. “Despite the AI bubble and valuation concerns, we see the current multiple correctly predicting above-trend earnings growth, an AI capex boom, increased shareholder dividends, and accommodative fiscal policy,” Lakos-Bujas wrote. “Furthermore, the revenue benefits associated with greater deregulation and AI-related productivity gains remain undervalued,” the strategist said, adding that even bigger gains could be in store. He said the S&P 500 could top 8,000 in 2026 “if the Fed loosens policy even further” than expected. That’s 18% compared to Tuesday’s closing price. Expectations for a Fed rate cut soared this week following the release of lackluster U.S. economic data. Traders are pricing in a more than 80% chance of a quarter-point rate cut in December, according to CME Group’s FedWatch tool. What to Buy JPMorgan has put together a basket of AI/data center beneficiaries that it believes will outperform in 2026. Stocks in the group include Amazon, Nvidia, and Alphabet. Amazon stock is up just 4.7% this year, lagging the S&P 500. Nvidia soared more than 32% in 2025, but fell more than 12% in November as competition in the AI space intensified. Google’s parent company Alphabet has soared more than 70% in 2025 after nearly doubling in the past six months.
