HSBC’s Big Call: S&P 500 to 7,500 as AI Spend Goes Into Overdrive in 2026

• HSBC forecasts the S&P 500 (SPX) to reach 7,500 by the end of 2026, implying roughly 11% upside driven primarily by sustained and intensifying AI capex across hyperscalers and enterprises.
• The bank expects a broadening of the AI trade in 2026 beyond mega-cap leaders to downstream adopters, software enablers, and infrastructure providers, supporting another year of double-digit index gains.
• Despite robust AI investment, HSBC anticipates a widening K-shaped economy with resilient high-end consumption (evident at Delta (DAL) and others) contrasting persistent pressure on lower-income consumers, reinforced by sticky inflation and policy that favors premium spending (benefiting players like Walmart (WMT)).

HSBC has issued a notably bullish 2026 year-end target of 7,500 for the S&P 500 (SPX), implying approximately 11% upside from current levels – 6,765.88 as of last check – and a second consecutive year of double-digit returns. The forecast rests on the conviction that capital expenditure tied to artificial intelligence will remain the dominant growth driver for corporate America through 2026, as competition among hyperscalers and enterprises intensifies.

The bank views sustained AI investment as powerful enough to offset mounting evidence of consumer bifurcation. Analysts project that large-scale data center buildouts, accelerated model training cycles, and enterprise adoption will continue flowing through the supply chain, supporting earnings growth even as broader economic momentum decelerates. Rather than treating elevated technology valuations as evidence of an impending bubble, the report argues that extended rallies in transformative technologies are historically precedented and that the current cycle still has considerable room to run.

A core conclusion is that leadership will broaden beyond the handful of mega-cap hyperscalers that have carried the market higher to date. Benefits are expected to accrue increasingly to downstream adopters, software layers, and enabling infrastructure providers as deployment scales. This anticipated rotation forms a key pillar of the constructive equity view.

At the same time, HSBC anticipates a pronounced two-speed economy in 2026. High-income cohorts and consumers with strong credit profiles continue to exhibit resilient spending and elevated confidence, while lower-income households face persistent pressure from sticky inflation and a softening labor market. Recent earnings reports reinforced this divergence: premium-focused carriers such as Delta Air Lines, Inc. (DAL) highlighted robust demand for higher-margin offerings, whereas mass-market retailers described widespread trading down among budget-conscious shoppers. Companies emphasizing value, including Walmart Inc. (WMT) and the off-price chains owned by TJX Companies, have consistently outperformed in this environment.

Policy developments are seen as likely to exacerbate rather than alleviate these disparities. Potential shifts in fiscal priorities, combined with a Federal Reserve that remains on hold amid lingering price pressures, are expected to favor higher-end consumption channels over broad-based relief.

The HSBC projection aligns with a growing cluster of optimistic 2026 calls from global brokerages. Deutsche Bank (DB) recently published the most aggressive target yet at 8,000, citing the same underlying theme of prolonged AI investment and adoption as the primary sentiment driver. Taken together, these forecasts suggest that Wall Street’s consensus continues to assign substantial probability to an extended AI capital-expenditure cycle powering equity returns well into the second half of the decade, even against a backdrop of widening economic inequality and cautious household behavior.

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