One of Wall Street's biggest bulls just doubled down on stocks. Here are his top trades for the next year.

• Mike Wilson, the CIO of Morgan Stanley, just unveiled his mid-year 2027 stock forecast.
• He lays out three reasons why he sees a more-than-10% increase for the S&P 500.
• Wilson also lays out several investing forecasts, recommendations, and allocation moves.

Mike Wilson, the CIO and chief US equity strategist at Morgan Stanley, is no stranger to sticking his neck out.

He was one of the few bearish strategists on Wall Street in 2022, a year that saw a bear market in stocks and 19% overall decline. More recently, Wilson stayed bullish throughout the Iran-war sell-off, and was proven right as the S&P 500 made up losses in a matter of weeks.

The benchmark has continued climbing to record highs since, moving closer to Wilson's year-end price target of 7,800 — one of the most bullish calls on Wall Street.

Speaking of S&P 500 price targets, Wilson just rolled out a new one, for mid-year 2027. He sees the index reaching 8,300 by then, a roughly 11% increase from current levels. Given his track record of accuracy in recent years, his latest commentary is must-read material.

Let's unpack three main factors Wilson sees driving the S&P 500 ever higher:

1. Stronger-than-expected earnings

Wilson points out that the median first-quarter earnings surprise for S&P 500 companies has been 6%, the highest in four years. And while AI-focused hyperscalers and chipmakers have been a big part of this, he says other sectors have gotten in on the action.

For the more zoomed out S&P 1500, Wilson says forward EPS growth has also accelerated to 12%, up from 8% at the start of the year.

The blue line in the chart below shows the upward earnings growth trend in action. Not-so-coincidentally, that's been correlated with a similar rise in the S&P 500.

2. A wartime valuation reset

When stocks reached their Iran-war lows in late March, the damage in the S&P 500 was a 9% drop, a move considered moderate by many strategists.

Wilson argues that — under the surface of the market — the damage was deeper, with the S&P's forward P/E multiple squeezed by 18%. He says that, in turn, helped to reset valuations at more reasonable levels before a sharp recovery.

3. We're in the middle of a rolling recovery

This catalyst is a holdover from Wilson's 2026 forecast from last year. He's actually been talking about it since the Liberation Day lows of April 2025, when he believes a "rolling recovery" began.

Wilson is essentially arguing that the US suffered a stealth recession that concluded with Liberation Day. Now he thinks we're still in the early stages of a bounce back that will juice earnings revisions and lift stocks.

What investors should do

Wilson laid out several investing forecasts, recommendations, and allocation moves:

• Cyclicals will outperform defensive stocks
• Small-cap stocks, despite strong earnings growth, will stay in line with large caps
• Sector preferences: Overweight industrials, financials, and consumer discretionary
• Healthcare downgraded from overweight

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