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Morgan Stanley’s Wilson Is Among Top Stock Bulls With Call for 16% S&P Rally

(Bloomberg) -- Morgan Stanley strategist Michael Wilson became one of the most bullish voices on US stocks as he predicted a 16% rally for the S&P 500 Index over the next year underpinned by strong corporate earnings.

The bank’s chief US equity strategist expects the benchmark to trade around 7,800 points by end-2026. That’s among the highest targets from strategists tracked by Bloomberg, and would mean a fourth straight year of double-digit gains for the index.

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“We’re in the midst of a new bull market and earnings cycle, especially for many of the lagging areas of the index,” Wilson wrote in a note.

The strategist expects S&P 500 earnings per share to jump by 17% and 12% in the next two years, respectively. He cites improved pricing power for companies, efficiency driven by artificial intelligence, accommodative tax and regulatory policies and stable interest rates.

Wilson was among the rare forecasters who held on to his bullish view in April even as stocks sank in the aftermath of sweeping US tariffs. His conviction proved correct, with the S&P 500 rebounding to a record as President Donald Trump dialed down his trade war.

The strategist was voted the second best portfolio strategist in a widely followed investor survey this year, behind Michael Kantrowitz at Piper Sandler & Co.

US stocks are entering the final stretch of a tumultuous year near all-time highs after third-quarter earnings came in much better than expected. Investors remain confident about economic growth despite doubts around high AI valuations as well as risks from the longest ever US government shutdown.

The S&P 500 has surged so far in 2025, after notching gains exceeding 20% in each of the previous two years.

Still, there are some voices of caution. For example, Goldman Sachs Group Inc. strategist Peter Oppenheimer expects US stocks to lag behind international markets for the next decade due to elevated valuations.

Morgan Stanley’s Wilson warned of near-term risks if the Federal Reserve’s policy remains more hawkish than expected. In the longer term, a “hot” economy could also revive inflation, he added.