2026 Outlook: S&P 500 Expected Sideways, Weighing FCF Conversion Against EPS Growth
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Florian Muller1.12K FollowersFollow5ShareSavePlay(12min)CommentsSummaryI project the S&P 500 to reach 6,960 by end-2026, implying just 2% upside from current levels.Elevated 25x TTM P/E serves as a valuation cap, with limited scope for further multiple expansion amid rising long-term bond yields and tepid free cash flow conversion.Fundamental EPS growth for 2026 is forecast at 14%, but again, it must be weighed against softer FCF conversion.Downside risks include disappointing ROI on AI data center investments and balance sheet stress for some individual companies, while upside could stem from unexpected multiple expansion or improved FCF conversion. DragonImages/iStock via Getty Images As year-end approaches, it is time for every analyst to dig out his/her crystal ball to predict the unpredictable: the future. While I personally am rather a fan of setting up an all-weather portfolio and managing the riskThis article was written byFlorian Muller1.12K FollowersFollowExcellent academic Finance background and Finance professional with over five years of cumulative experience in Consulting & Audit Firms including a professional Valuation position, FP&A and Controlling positions, and Financial writing.My approach is mostly value-oriented. However, valuation is rarely an appropriate short- to mid-term timing indicator, but rather hints at long-term chances or risks. In my pieces, I assign the written word and data presented more value than a simple rating and might often rate hold/neutral, even when my inclination is bullish or bearish. Rating systems do not consider time horizons or investment strategies. My articles aim to inform, not to make decisions.Analyst’s Disclosure:I/we have a beneficial long position in the shares of GOOGL, MSFT, NVDA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. I have no index-like/ETF holdings but single-stock positions that are represented in the index.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.