UBS Raises S&P 500 Forecast to 6,400 by June 2026: Bull Market Expected to Continue
UBS Group has significantly increased its S&P 500 forecast, projecting the leading U.S. stock index to hit 6,400 by June 2026. This bullish revision is based on stronger-than-expected corporate earnings and a more favourable economic outlook for the latter half of the year.
UBS Updates 2025 and 2026 S&P 500 Targets Amid Optimism
In addition to the 2026 target, UBS also raised its year-end 2025 forecast to 6,000, up from a previous estimate of 5,800. The upgrade reflects revised earnings per share (EPS) projections, now anticipated to reach $260 in 2025 and $280 in 2026—both higher than earlier estimates.
The investment bank's outlook is driven by expectations of:
These macroeconomic catalysts are expected to support equity market momentum through 2026.
Valuation Concerns Temper Short-Term Outlook
Despite long-term optimism, UBS has shifted its near-term stance on U.S. equities from “Attractive” to “Neutral”. This change comes as the S&P 500’s forward price-to-earnings (P/E) ratio climbs above 21x, suggesting that investors may have already priced in easing trade tensions.
According to UBS strategist David Lefkowitz, “Investors appear to be factoring in a significant de-escalation of trade risks,” which could limit short-term upside potential.
Bull Market Intact Despite Headwinds
As of 20 May 2025, the S&P 500 is trading around 5,940, implying an 8% gain to reach UBS’s June 2026 target. While challenges such as high tariffs and renewed trade tensions remain, UBS maintains confidence in the longevity of the current bull market.
“We continue to believe in the long-term strength of U.S. equities,” the UBS research team wrote. “Despite short-term volatility, the outlook for stock market growth remains positive.”
Top Performing Sectors: Technology, AI, Healthcare, and Utilities
UBS highlights several high-potential sectors that are expected to outperform over the next 12–18 months:
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Technology Stocks: Led by aggressive AI investments from companies like Meta (NASDAQ: META) and Microsoft (NASDAQ: MSFT).
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Communication Services: Particularly internet platforms benefiting from artificial intelligence innovations.
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Healthcare Sector: Viewed as undervalued with strong earnings growth potential.
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Utilities: A defensive play offering exposure to rising energy demand from AI and data centre expansion.
AI Investment and Trade Policy Remain Key Variables
UBS’s base-case scenario assumes a stable macroeconomic environment and continued improvement in economic indicators through the end of 2025. However, the firm also outlines two possible alternative outcomes:
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Bullish Scenario: The S&P 500 could reach 6,700 by December 2025 if trade policy improves and AI drives greater-than-expected productivity.
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Bearish Scenario: A hard economic landing could pull the index down to 4,500.
UBS Advises Balanced Investment Strategy for Now
Given current market conditions, UBS suggests that investors adopt a balanced investment approach. The risk-reward profile for U.S. stocks appears more even in the short term, though the long-term outlook remains favourable.
(Sources: investing.com, reuters.com, ChatGPT)
