The S&P 500 might not be done climbing.
Elyse Ausenbaugh, head of investment strategy at JPMorgan Wealth Management, doubled down on the bank’s S&P 500 target, forecasting a surge over 8,000 in a bullish 2026 scenario, a CNBC interview revealed.
That marks an eye-catching four consecutive years of double-digit returns, a feat that has only happened four times in the past 100 years.
For perspective, here’s a look at the S&P 500’s year-end closes over the past five years, along with the year-over-year changes.
- 2020: 3,756.07 (+16.3% year over year)
- 2021: 4,766.18 (+26.9% YoY)
- 2022: 3,839.50 (-19.4% YoY)
- 2023: 4,769.83 (+24.2% YoY)
- 2024: 5,881.63 (+23.3% YoY)
- 2025: 6,845.50 (+16.4% YoY)
Source: Federal Reserve Bank of St. Louis, FRED Economic Data
If you haven’t been sleeping under a rock for the past three years, you know the stock market has been on a tear, thanks to AI.
Though the AI tailwind hasn’t been blowing as hard as it was, Ausenbaugh is still buying into the massive AI spending narrative.
That perspective, though, runs counter to Bank of America analyst Michael Hartnett’s recent warning about the stock market’s narrow market leadership.
In fact, Hartnett argued that the massive AI boom is dragging the biggest tech giants into a significantly costlier spending cycle.
Still, legendary contrarian investors such as Cathie Wood are leaning into the pullback and continue to buy the dip in Big Tech stocks.
Ausenbaugh believes in the “structural buildout” narrative with AI, tying a global capex wave to the technology, along with security priorities that sustain earnings momentum.
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Major Wall Street 2026 year-end targets
- S&P 500 (latest close at 6,941.47):YTD +1.4%, 6-month +7.7%, 1-year +14.4% (price return, calculated from prior closes)
Barclays: 7,400 (+6.6%)JPMorgan: 7,500 (+8.0%)
Goldman Sachs: 7,600 (+9.5%)
Citigroup: 7,700 (+10.9%)
Morgan Stanley: 7,800 (+12.4%)
Deutsche Bank: 8.000 (+15.2%)
Source: AP News, Reuters
The S&P 500’s next leg may be powered by investment, not consumption
The core engine driving stocks has effectively shifted, Ausenbaugh told CNBC.
So in essence, this isn’t a rally that’s overly dependent on the next payrolls print or consumer retail sales numbers.
Speaking of consumers, Bank of America CEO Brian Moynihan said markets are overreacting to the relatively weak December retail sales report, pointing to healthier numbers being seen in mid-February.
Related: Amazon delivers a jaw-dropper that changes the AMZN conversation
Though labor data and rate cuts remain important, the bigger force at play at this point is a durable global AI investment cycle.
Ausenbaugh’s lofty bull case, though, hinges on tangible proof points.
So instead of focusing on mere hype, it’s about real adoption and productivity gains backed by long-term leverage from AI spending.
Her core argument is that what we’re seeing right now is a wave of strategic tech buildouts, led by data centers, cutting-edge chips, and advanced networking infrastructure.
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On top of that, national security priorities, driven by narratives such as defense, reshoring, and supply chain resilience, create an even more potent second tailwind, reinforcing the same buildout impulse.
Perhaps the most surprising element to Ausenbaugh’s call is that she isn’t calling for easy money to fuel the momentum.
The markets are seeing a couple of rate cuts at this point, while JPMorgan expects just one, then patience. That essentially means that the stock market can continue on its run even without aggressive easing.
Naturally, the volatility that comes with it is part and parcel of the game, which is why she is urging diversification across the value chain.
The AI spending cycle is already “macro-sized” and still ramping
At some point, a theme becomes a massive macro force.
Developments over the past three years show that AI has indeed reached that point, with corporate and government spending rising to levels that effectively rival traditional economic stimulus.
Far from being an incremental IT budget creep, the numbers behind the AI spending cycle are insane, to say the least.
Related: Top analyst revamps Apple stock price target
- Big Tech’s combined surge: Amazon, Microsoft, Alphabet, and Meta have collectively spent over $400 billion on AI data centers in 2025, with projections approaching $650 billion in 2026, Barron’s noted.
- Amazon’s step-change: Amazon projected a whopping $200 billion in 2026 capex, The New York Times reported, up from $131 billion in 2025 (over a 50% jump), tied to AI and cloud infrastructure.
- Alphabet and Meta’s aggressive ramp: Google-parent Alphabet targeted $175 to $185 billion in capex, roughly doubling from $91.45 billion in 2025, according to Reuters, while Meta lifted its 2026 outlook to $115 to $135 billion, supercharged by their respective AI endeavors.
- Microsoft’s rapid scaling: Microsoft logged nearly $35 billion in capex in a single fiscal quarter (FY26 Q1) and signaled continued increases with plans to boost AI capacity by 80%+.
- Power demand confirms the scale: The International Energy Agency projects global data-center electricity use to increase by nearly 50% to 945 terawatt-hours by 2030, growing around 15% annually.
National security is quietly underwriting the AI boom
The other major pillar of Ausenbaugh’s thesis comes from Washington.
Governments around the globe are now treating advanced chips, autonomy, and computing as strategic capacity.
For a little context, the Pentagon’s FY2026 budget request totals $961.6 billion, and within that, a sizeable $13.4 billion is specifically linked to autonomous systems and autonomy technology.
In tandem, chip manufacturing has quickly become a national security issue.
We’ve seen that over the past few months as the NvidiaH200 chip drama with China unfolded and CEO Jensen Huang weighed in, as Reuters reported.
The CHIPS and Science Act also allocates a whopping $52.7 billion over five years to supercharge domestic chip production and research.
In addition, it’s important to note that the Department of Defense has already directed an additional $160 million to microelectronics initiatives under the program.
Related: Bank of America CEO drops surprising view on the economy
