S&P 500's Earnings Growth to Slow in 2027, 2028, UBS Says

02:35 PM EST, 11/11/2026 (MT Newswires) -- S&P 500 earnings growth will likely slow annually through 2027 and 2028 amid potential headwinds, including regulatory risks for data center expansion, UBS Securities said in a note. UBS projects the S&P 500's earnings per share to grow 18% to $430 in 2027 and 14% to $490 in 2028, following an estimated 33% increase this year. Three technology companies -- Nvidia (NVDA), Micron Technology (MU) and Broadcom (AVGO) -- are projected to account for about 45% of the S&P 500's earnings growth in 2027, UBS said. The brokerage sees downside risks to the 2028 EPS outlook, considering that it's a presidential election year with potentially weaker data center capital spending. The S&P 500 index has suffered a decline in its price-to-earnings valuation multiple this year amid concerns about massive artificial intelligence spending and the return on that investment, UBS strategists including Keith Parker said. The Democratic Party's victory in the US midterm elections last week introduces new risks around data center capacity additions. "Markets are digesting US midterm election results and potential impacts on (about) 30% of US new data center construction in 2028," Parker said. "Policy details are unlikely before next year, so the hit to earnings is hard to size today." A jump in bond yields and oil prices have also pushed up risk premia, weighing on equity valuations, Parker said. UBS maintained its end-2027 S&P 500 target at 8,900 and set a 2028 target of 9,600, taking into account its EPS growth estimates. It lowered its 2026 target to 7,900. "We acknowledge the highly volatile backdrop driven increasingly by positioning and technicals makes that (2027) target increasingly difficult to achieve," the UBS strategists said. "That said, we do see the potential rising for a rebound into early next year after the derating and de-risking." Price: 177.14, Change: +8.34, Percent Change: +4.94