With almost three quarters of 2025 in the rearview mirror, market participants are increasingly shifting their focus toward 2026.
“As we met with a variety of US equity investors last week — ranging from hedge funds to high-net-worth retail, from high-level macro investors to stock pickers, and everything in between — it became clear to us that it’s time to start talking more about 2026,” RBC Capital Markets’ Lori Calvasina said Monday.
She preliminarily sees the S&P 500 ending 2026 at 7,100 as earnings per share (EPS) grow about 10% to $297. (For more on how to think about year-end targets, read: A better way of thinking about Wall Street’s year-end price targets 🗺️)
Her projections are derived from a blend of five models that factor in almost every imaginable macro variable.
But one assumption caught my attention.
Analysts expect fatter profit margins
“We are baking in some margin expansion for 2026,” she wrote. On the subject of profit margins, she added, “One of our biggest takeaways from 2Q25 reporting season is that companies are laser focused on mitigation strategies around tariffs.”
This is in line with Morgan Stanley’s analysis of Q2 earnings calls: “Unsurprisingly, we saw a significant increase in …