Wells Fargo Lowers S&P 500 Target to 7,700 and Downgrades Tech Stocks

TLDR

• Wells Fargo lowered its S&P 500 year-end target from 7,950 to 7,700, implying just 1% upside from current levels
• The bank says the market is in the late stage of its growth cycle, which typically leads to lower valuations
• Wells Fargo downgraded tech stocks to equal-weight, citing AI spending slowdown risks and political pressure on data centers
• Healthcare was upgraded to overweight as a more defensive play in a late-cycle market
• Bank of America also updated its target, raising it to 7,400 but warning of a weak seasonal period ahead

Wells Fargo has cut its S&P 500 year-end price target from 7,950 to 7,700, saying the stock market rally is losing steam. The new target leaves room for only about 1% more gains before the end of 2026.

The bank’s strategists, led by Ohsung Kwon, made the call on September 14. The S&P 500 closed Monday at around 7,620, up 11% for the year.

Late-Cycle Pressure on Valuations

Wells Fargo says the market is entering the late innings of its growth cycle. In this phase, investors typically pay less for stocks relative to earnings, a process known as multiple compression.

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