Tech stocks are set to lead the 2026 market as investors position for strong earnings growth and massive artificial intelligence investment, according to major Wall Street forecasters. Goldman Sachs projects the S&P 500 to reach 7,600 by year-end, representing a 6% gain, powered by earnings expansion and the AI buildout reshaping corporate capital allocation.
Analysts expect robust earnings growth to fuel stock gains this year. Goldman Sachs strategists raised their earnings-per-share forecasts to $340 for 2026, representing 24% annual growth, while Morgan Stanley projects 23% earnings growth for the year. These forecasts reflect both traditional business expansion and the extraordinary tailwind from AI-related spending.
AI investment is driving a disproportionate share of market gains. Goldman Sachs estimates that AI-related investment will account for approximately 40% of S&P 500 earnings-per-share growth in 2026. This concentration reflects the scale of spending by the largest technology companies, which are building out AI infrastructure at record pace.
The AI Infrastructure Supercycle
The largest cloud computing companies are undertaking one of the most significant capital expenditure cycles in history. Goldman Sachs reports that consensus capital expenditure estimates for the largest cloud infrastructure companies jumped by $130 billion in the most recent quarter, reaching $670 billion for 2026. That spending represents more than 90% of their expected cash flows for the year.
Global data center spending has exceeded all prior estimates. Dell’Oro Group raised its global data center capex outlook to more than $1 trillion for 2026, a milestone that analysts had previously expected to arrive years later. This infrastructure buildout is essential to supporting the computational demands of large language models and AI applications.
The AI investment boom extends beyond the largest technology firms. U.S. private AI investment reached $285.9 billion in 2025, according to the Stanford AI Index, more than 23 times the $12.4 billion invested in China. The U.S. also led in entrepreneurial activity, with 1,953 newly funded AI companies in 2025, more than 10 times the next closest country.
AI adoption is spreading rapidly across organizations and consumers. The Stanford AI Index reports that organizational adoption reached 88% in 2025, and 4 in 5 university students now use generative AI. Generative AI reached 53% population adoption within three years—faster than the PC or the internet—though adoption rates vary significantly by country and correlate with GDP per capita.
Despite the bullish outlook, risks remain. Goldman Sachs notes that market breadth—the share of stocks participating in the rally—has dropped to one of its narrowest levels since the dotcom era. The concentration of gains in a small number of mega-cap technology firms, combined with uncertainty about whether AI spending will translate into proportional revenue growth, creates potential volatility for investors positioning for 2026.
Sources
- Goldman Sachs — S&P 500 forecast to reach 7,600 by year-end 2026 with 6% gain, AI investment driving 40% of earnings growth, cloud capex estimates of $670 billion for 2026
- Morgan Stanley — 23% earnings growth expected in 2026
- Dell’Oro Group — Global data center capex outlook raised to more than $1 trillion for 2026
- Stanford AI Index Report — U.S. private AI investment of $285.9 billion in 2025, 1,953 newly funded AI companies, 88% organizational adoption, 53% generative AI population adoption
