Evercore ISI strategist Julian Emanuel has established a year-end 2026 base-case target of 7,750 for the S&P 500, while also assigning a 30% probability to a bullish scenario in which the index climbs to 9,000, fueled by artificial intelligence-driven strength in technology, communication services and consumer discretionary sectors.
In a client note released Monday, Emanuel said the combination of a long-term technology-led bull market and major geopolitical shifts is creating a much broader range of possible market outcomes than investors and traditional forecasting models typically anticipate, increasing the likelihood of extreme scenarios on both the upside and downside.
Drawing historical comparisons, Emanuel wrote: “The Pandemic changed everything. Warlike stimulus, surging M2, and a productivity shock collide with an ‘AI Revolution’ – reminiscent of the 1920s and 1990s.”
He added that these dynamics could help drive productivity growth to 3% by the end of the decade.
Evercore ISI recommended investors consider long-dated call options tied to what the firm described as the “AI Class of 2026” stocks, along with the QQQ ETF, to capture what it called potentially “seemingly unimaginable” upside.
At the same time, the firm also advised using a collar strategy on the SPY ETF as protection against near-term risks tied to oil prices and interest rate volatility.
Emanuel nevertheless warned that artificial intelligence remains inherently probabilistic and subject to important limitations. Evercore ISI said large language models tend to display a “Narrow Consensus” bias, where outputs cluster around mainstream expectations and fail to properly account for extreme or low-probability outcomes.
According to Emanuel, sustainable value creation will likely come from specialized expertise and ownership of complete operational workflows rather than from AI capability alone.
He also argued that prediction markets primarily reflect prevailing crowd expectations rather than accurately forecasting future developments, making them less dependable for long-duration or highly asymmetric market outcomes.