The S&P 500 has been on quite a tear. After surging 25% in 2024 and nearly 18% in 2025, the index has continued to climb in 2026 by another 9% so far, powered by stellar earnings from the AI technology sector.
And according to one of the most bullish forecasters on the street, the best could still be yet to come.
What the forecasters are saying?
Right now, Wall Street’s major institutions are firmly in the bull camp. Goldman Sachs has raised its year-end 2026 target to 8,000, projecting 24% earnings-per-share growth driven by AI infrastructure investment. Meanwhile, Morgan Stanley‘s gone further, setting a mid-2027 target of 8,300.
But one of the most bullish longer-range forecasts comes from the Economy Forecast Agency, which projects the index could reach as high as 9,808 by June 2027 – roughly 30% above today’s levels. That means a £5,000 investment into an S&P 500 tracker fund today could grow to roughly £6,540 by this time next year!
Needless to say, it’s quite an exciting prospect. Of course, forecasts should always be taken with a healthy pinch of salt, especially in the current geopolitically unstable market climate.
Yet even with this uncertain backdrop, stock pickers could earn even more impressive returns…
The one stock to watch
While Nvidia‘s (NASDAQ:NVDA) been dominating headlines lately, the tech giant doesn’t appear to be slowing.
With AI spending still accelerating, the business has already reached a near-$5trn market-cap. And yet, the consensus from institutional analysts is that even more growth’s on the horizon, with an average share price target of $298.
Compared to where the stock’s trading today, that implies a 41.4% potential capital gain is on the horizon, capable of turning £5,000 into potentially £7,070. And it’s hard to argue with its latest results.
In just one quarter, revenue hit a record $81.6bn after skyrocketing 85% versus a year ago. And data centre sales alone reached $75.2bn – a 92% increase courtesy of hyperscalers continuing to pour capital into AI infrastructure at a record pace.
So with Nvidia seemingly firing on all cylinders and simultaneously driving the bulk of S&P 500 returns, should I still be considering this business for my portfolio?
Where’s the risk?
While Nvidia’s share price momentum is backed by genuinely outstanding fundamentals, there’s no denying that the stock’s trading at a premium. And that opens the door to significant volatility if something starts to go wrong.
Any slowdown in AI or data centre spending could force institutional analysts to revise their forecasts downwards, sending Nvidia shares tumbling in the process.
Even if spending remains elevated, other chip designers are rushing to catch up with cheaper ‘good enough’ alternatives that could start to meaningfully dent Nvidia’s pricing power. And it’s also worth flagging the ongoing export restrictions to markets such as China, which has already seen a notable performance impact in 2025.
The bottom line
So far, the S&P 500 looks well supported by genuine earnings growth rather than pure speculative froth. However, those earnings are coming from a notoriously cyclical sector. And if the cycle suddenly starts to shift, US stocks could be in for a wild ride.
However, for now, I remain cautiously optimistic. And despite their already impressive run, Nvidia shares might still be worth mulling.
Should you invest £5,000 in Nvidia right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Nvidia made the list?
Zaven Boyrazian does not hold any positions in the companies mentioned.
