UBS is bullish on earnings and valuations, with an S&P 500 target of 8,900 points by 2027.

November 10 — UBS predicts that U.S. stocks will rebound in 2027, driven by strong earnings growth and valuation recovery, hedging risks such as high interest rates and constrained data center construction. The team led by Keith Parker set a target: the S&P 500 index to reach 8,900 points by the end of next year, compared with Monday's close of 7,549.94 points, an increase of about 18%; it also expects constituent earnings to grow 18% by the end of 2027.

The report says AI remains the core theme, with a bullish view on semiconductors, software, and large cloud providers. Market concerns about capital expenditure have depressed sector valuations, but related demand is accelerating upward. Nvidia, Micron, and Broadcom are expected to contribute about 45% of the S&P 500's earnings increment in 2027.

The team notes that new data center control policies may affect 30% of the planned new computing capacity in the United States for 2028. In terms of allocation, they prefer the Nasdaq 100 over the Russell 2000; in defensive sectors, health care is the top choice, and in cyclical sectors, financials are preferred.