Wall Street’s 2026 Outlook in One Bold Report

Wall Street expects U.S. stocks to extend their rally into 2026, even after three straight years of double-digit gains.

Here is Wall Street’s 2026 outlook.

Strategists at Bank of America, JPMorgan Chase, and Goldman Sachs expect the S&P 500 to rise again in 2026.

Forecasts cluster around mid-to-high single-digit returns, reflecting optimism. But far less than the double-digit gains of recent years.

The S&P 500 is up roughly 80% since the start of 2023.

A fourth consecutive year of gains in 2026 would rank among the longest winning streaks in market history, which naturally raises concerns about sustainability.

Falling interest rates, a potentially more dovish Federal Reserve leadership, and ~15% expected earnings growth for S&P 500 companies form the core bullish thesis.

At ~22× forward earnings, valuations sit well above long-term averages.

AI stocks have led for three years, while signs of speculation appear in assets like Bitcoin and meme stocks (echoing late-cycle behavior).

Despite inflation, tariffs, and demographic pressures, U.S. consumers and businesses continue spending (especially on AI infrastructure).

That resilience may be enough to keep markets rising, but 2026 looks like a year where fundamentals matter far more than momentum.

Ray Dalio recently reported that much of the S&P 500’s 2025 gains came not from real growth, but from the dollar quietly losing value. Reportedly down 10% last year!

He’s not alone. Several BlackRock, Fidelity, and Bloomberg analysts say to expect further dollar decline in 2026.

So, even when your U.S. assets look “up,” your purchasing power may actually be down.

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Software stocks are getting crushed. While the Nasdaq 100 is up ~20%, the Morgan Stanley SaaS Index is down ~30%, marking one of the widest divergences in years (Yahoo Finance).

Here are 4 software companies at decade low forward P/E.

Bull case: Salesforce holds roughly 30% share in core CRM markets and continues expanding across service, marketing, commerce, and AI. Margin improvement remains a key lever as cost discipline improves.

Bear case: Growth is increasingly tied to mature end markets. Past acquisitions add integration risk, and the company’s AI monetization strategy is still evolving.

Bull case: A leading IT service management platform with continued share gains and new workflow-driven growth avenues. GAAP profitability reached breakeven in 2019, leaving room for margin expansion.

Bear case: Competitive intensity rises outside core ITSM, and growth may naturally slow as scale increases.

Bull case: Strong SMB adoption through a freemium model and consistent upsell into the midmarket.

Bear case: Net retention trails peers, and competition from larger platforms is intensifying.

Bull case: Well-positioned for cloud migration in HCM and finance, with strong global partnerships supporting suite adoption.

Bear case: Product depth gaps in financials and rising AI investment needs may pressure margins.

Berkshire Hathaway has taken a formal step toward exiting its ~28% stake in Kraft Heinz, signaling a strategic reset under incoming CEO Greg Abel (CNBC).

The filing allows Berkshire to sell its entire position—worth roughly $7.7 billion—ending one of the few high-profile missteps associated with Warren Buffett.

The move matters less for timing and more for symbolism.

Kraft Heinz shares are down ~70% since the 2015 merger, pressured by shifting consumer tastes, rising costs, and slow growth across legacy brands.

While dividends have softened the blow, Berkshire still booked a $3.8B write-down last year.

Markets reacted swiftly, with shares dropping as much as 7.5% on the news.

Most analysts view the decision as Abel’s effort to streamline the portfolio early.

$10,000 invested in Zoom (ZM) at its IPO is now worth only about ~$13,100.

Zoom dramatically underperformed a simple broad market bet like the S&P 500 (SPY), which returned roughly +161% over the same period.

That means Zoom’s total return (~31%) trails by a wide margin despite revenue growing ~1,100% and free cash flow up ~4,900% — highlighting that strong growth doesn’t matter if you overpay.

Long-term data on U.S. IPOs supports this pattern.

From 1980–2025, the average first-day IPO return was about ~19%, reflecting initial underpricing, but long-run performance often lags broad benchmarks once that pop fades.

More detailed research shows that average three-year buy-and-hold returns for IPOs — especially non-VC-backed or lower-sales firms — can be negative on a market-adjusted basis, even while first-day pops excite investors.

In other words, IPO performance is highly skewed: a few winners drive good short-term stats, while the majority underdeliver over time — a structural risk many retail participants underestimate (Ritter).

Every major State Street Global Advisors stock ETF, organized by how investors actually build portfolios.

And if you’ve ever wondered why passive wins some years and active wins others, you’re not imagining things.

The evidence shows they actually take turns leading the market.

Active and passive leadership rotates.

Why this matters now:

The optimal approach isn’t either/or—it’s cycle-aware allocation (HardfordFunds).

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