A source anticipates that the S&P 500 will achieve a fair value of 7,500 by the conclusion of 2026, suggesting an approximate 9% increase from present levels, supported by consistent earnings growth and ongoing robustness in stocks associated with artificial intelligence. “We forecast another 9% upside for the S&P 500, with a 2026 target of 7500,” stated in a note, referencing “double-digit earnings CAGR” and resilient profitability in technology-related sectors.

It is observed that despite ongoing apprehensions regarding “a potential correction” and “AI unwinding risk,” the rally continues to be underpinned by fundamental factors. “After comparing the profitable AI trade to the profitless dotcom bubble, we see more upside despite potential road bumps,” the analyst stated. The company’s fair value target for 2026 is grounded in projected earnings per share of 340 for 2027, indicating a compound annual growth rate of 13% and a forward price-to-earnings multiple of 22 times. The optimistic scenario anticipates the index climbing to 8,100, whereas the pessimistic outlook projects a decline to 5,400.

Reports suggests a strong 13% EPS CAGR for 2026–27, with margins expected to remain stable even in the face of potential top-line downgrades. Peramunetilleke indicated that the firm prioritizes growth-oriented sectors, such as communication services, financials, and consumer staples, while maintaining a neutral stance on technology and industrials, and adopting an underweight position in energy, materials, and consumer discretionary.

“We believe the AI trade continues to have potential when juxtaposed with the dotcom era,” he noted, further stating that growth stocks “typically perform well during bullish markets” and are still appealingly priced at “a 10% discount to the 5-year peak relative PE.”