Key Takeaways
Morgan Stanley’s Mike Wilson, one of Wall Street’s most prominent bears, is now calling for the S&P 500 to reach 8,000 by year-end.
“Over the next 12 months, we see the rolling recovery continuing to progress, driven by a strong earnings environment as positive operating leverage persists,” Wilson wrote in a note published Wednesday.
The call lifts Wilson's 12-month S&P 500 target to 8,300, implying 12.8% upside from recent levels around 7,360. He sees index earnings rising to $339 per share in 2026 and $380 in 2027, topping the consensus forecast collected by LSEG for 2026.
The pivot is significant as Wilson remained skeptical during the AI-driven rally that began in late 2022. His new forecast suggests the bull market is not only sustainable but set to broaden, and he moved to favor industrial, financial, and consumer discretionary stocks while downgrading healthcare to “equal weight.”
Wilson’s new targets place him among the most bullish forecasters on Wall Street, just below Ed Yardeni’s 8,250 year-end call but ahead of the 7,900 12-month target from RBC Capital’s Lori Calvasina. The core of his argument is that corporate profit growth is accelerating from an already high level, a trend strong enough to overcome geopolitical risks and a restrictive Federal Reserve.
“Resiliency in earnings data despite geopolitical risk, private credit concerns and AI disruption is supportive of our view,” Wilson said. He argued that unlike prior cycles, the recent oil price shock did not derail growth because earnings were already accelerating, supported by AI-driven efficiency gains and a new capital expenditure cycle.
Wilson does not believe Fed rate cuts are necessary to reach his targets. He argues that strengthening demand is creating pricing power for companies, a positive for equities as long as it doesn’t force the Fed into a new hiking cycle, which is not his firm’s view.
The shift from a well-known bear to a bull adds weight to a growing consensus that the market rally has further to run. The new forecast suggests investors should use any pullbacks as buying opportunities, with the direction of travel pointing higher into 2027. Investors will watch for upcoming earnings reports to see if Wilson's thesis of a broadening recovery plays out.
This article is for informational purposes only and does not constitute investment advice.
