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Investors received another vote of confidence that stocks will extend their rally next year.
RBC Capital Markets has joined other major firms in setting a bullish year-end price target for 2026, with analysts expecting the benchmark S&P 500 (^GSPC) to hit 7,750 by next December. But even as the firm sees continued prominence from the megacap AI winners — despite valuation fears and macroeconomic uncertainty — RBC analysts see a contest playing out between growth and value stocks.
“While we give an edge to value and the broader market over growth and the Mag 7 for now, we think it’s important to keep in mind that this tug of war may not be over yet,” wrote analysts led by Lori Calvasina, head of US equity strategy.
It’s a compelling end-of-year projection that shows you can be bullish even if you’re not sure which part of the market will be pulling the lion’s share of wagon — and a dose of validation for the index fund crowd.
Calvasina wrote that even as this year was defined by the success of the top 10 market cap names, leadership is primed to rotate, in large part thanks to sentiment. AI jitters and concerns surrounding the heavy concentration of the stock market tied to the AI theme are very real.
Read more: How to protect your portfolio from an AI bubble
“While we are not in the AI bubble camp, we don’t think these fears are unfounded,” she wrote.
Still, for the rotation into value stocks to take hold, earnings growth dynamics need to shift more clearly in the broader market’s favor.
RBC’s target, which approximates the average of several models ranging from 7,200 to nearly 8,000, implies a gain of roughly 13% from current levels. And it echoes other optimistic projections that foresee double-digit-percentage gains by the end of next year.
Last week, HSBC analysts set their 2026 price target at 7,500. Deutsche Bank aimed even higher, registering the most bullish call yet at 8,000 and emphasizing AI excitement.
RBC’s shot isn’t quite so full-throated, and the bank sees the 2026 growth vs. value tug-of-war being shaped by the same familiar themes that investors have grappled with in 2025, like the labor market, AI, and political risk.
Calvasina and Co. did, however, issue a reminder not to place too much stock in the Fed’s meeting-by-meeting machinations when thinking about the markets next year, as time will flatten any by-meeting decisions.