Wall Street anticipates continued growth in the AI buildout in the upcoming year. HSBC projects the S&P 500 to reach 7,500 by December 2026, signaling a bullish outlook on the AI-driven rally. The forecast suggests another year of double-digit gains similar to the late 1990s tech boom.

HSBC analysts believe AI capital expenditure will dominate in 2026 as the AI arms race escalates. The firm’s target implies a 12% gain from current levels, fueled by an AI investment boom. Despite concerns about an AI bubble, HSBC remains optimistic, expecting rallies to persist and recommending a broadening of the AI trade.

HSBC predicts 2026 to be characterized by a “two-speed economy,” with disparities between high and low-income earners. High earners are more confident in the economy, while low-income individuals remain cautious. The latest earnings season highlighted this divide, with travel and hospitality sectors focusing on premium offerings, and retailers facing pressure from consumers seeking deals.

The K-shaped consumer trend is expected to widen in 2026, with policy shifts favoring higher-end consumers. Companies like Walmart and TJ Maxx’s owner benefit from offering high value propositions. HSBC analysts anticipate this trend to continue as the Fed maintains its stance and policies cater to higher-end consumers.

Read more at Yahoo Finance: HSBC sees S&P 500 hitting 7,500 by end of 2026 with ‘more to come’ in the AI trade