UBS keeps S&P 500 end-2027 target at 8,900, says derating sets up strong returns Sam Boughedda Tue, November 10, 2026 at 8:13 AM EST 2 min read UBS +1.80% ^GSPC +2.35% CL=F -3.11% US500 Trade UBS on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Investing.com -- UBS kept its year-end 2027 S&P 500 target at 8,900, arguing in a note on Tuesday that this year's sharp fall in valuations has historically set up strong returns.
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Strategist Keith Parker noted that the S&P 500's forward price-to-earnings ratio fell about 20% in 2026, even as earnings are on track to grow about 33%.
He pointed to concerns about returns on AI spending and regulation, higher bond yields and credit spreads, rising oil prices and weaker share buybacks.
"History is supportive though," Parker wrote, explaining that in years after the S&P 500's P/E fell more than 10%, the index has returned a median 20%.
UBS forecasts S&P 500 EPS growth of 18% to $430 in 2027 and 14% to $490 in 2028. Its 8,900 target equals about 18 times 2028 EPS, while its end-2028 target is 9,600.
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However, the bank said state-level pauses on data center construction after the midterms put about 30% of planned U.S. capacity additions in 2028 at risk.
"Data center pauses skew 2028 risks lower, and with policy details unlikely before next year, we will revisit forecasts as they emerge," Parker said.
UBS sees the drivers of the derating close to bottoming. It expects buybacks to rebound by $200 billion to $400 billion next year.
"AI capex slowing and a further yield spike are the main risks, but after this much derating, more downside looks priced," the strategist added.
The bank recommends buying semiconductors over tech hardware, and it is overweight software, hyperscalers, health care and financials. It favors the Nasdaq 100 over the Russell 2000 and stocks with strong balance sheets.
UBS keeps S&P 500 end-2027 target at 8,900, says derating sets up strong returns
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