UBS raised its year-end 2026 target for the S&P 500 to 7,900 from 7,500, betting that earnings growth outside the tech sector can offset a semiconductor slump. The bank says the broader bull market in US equities remains intact and expects the Federal Reserve to hold rates steady for the next six to twelve months.
UBS raised its year-end 2026 target for the S&P 500 to 7,900, up from 7,500. The move comes after the index closed July essentially flat while the Philadelphia Semiconductor Index dropped more than 20% during the month.
The semiconductor slide reflects growing investor skepticism about the pace of AI monetization and the near-term payoff of massive capital spending programs. But UBS analysts point to earnings growth across a broad range of industries outside technology as the reason they stayed constructive. In their view, the bull market is no longer a one-sector story.
UBS is projecting earnings-per-share growth of more than 20% for 2026. The bank named three sectors as primary growth drivers: AI infrastructure, energy resources, and what it calls the longevity sector, covering healthcare and biotech businesses tied to aging demographics.
UBS expects the Federal Reserve to hold interest rates steady in a range between 3.50% and 3.75% over the next six to twelve months. Stable rates matter for equities because they reduce the discount rate applied to future earnings, making stocks look more attractive relative to bonds.
Still, the July divergence is the risk to watch. If AI spending fails to convert into earnings at the pace the market expects, the semiconductor correction could broaden and test whether the earnings diversification UBS is counting on actually holds.
Source: Crypto Briefing
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