Wall Street thinks the stock market will maintain its momentum in 2026. The median target price says the benchmark S&P 500 (^GSPC 1.52%) will increase to 7,968 in the next year, which implies about 17% upside from its current level of 6,827.
Investors with $2,500 can buy a share of Amazon (AMZN 1.52%), MercadoLibre (MELI 5.20%), Circle Internet Group (CRCL +0.90%), and Pure Storage (PSTG 1.71%). Most Wall Street analysts that follow the companies believe the stocks are undervalued. Here are the important details.
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1. Amazon: 32% upside implied by the median target price
Amazon has a strong presence in three growing industries: e-commerce, digital advertising, and cloud computing. The company is leaning on artificial intelligence (AI) to increase sales and improve profitability across each operating segment, as detailed below:
- E-commerce: Amazon runs the largest online marketplace in North America and Western Europe. It has developed generative AI tools for customer service, inventory placement, and last-mile delivery, as well as models that make its industrial robot fleet more efficient.
- Advertising: Amazon is the third-largest ad tech company and the largest retail advertiser. It has built generative AI tools that let brands create images, video, and audio; the company has also developed an agentic AI tool that can research products and create campaigns.
- Cloud computing: Amazon Web Services is the largest public cloud. It has added new platform services like Bedrock for generative AI application development. AWS has also designed custom AI chips for training and inference workloads that provide clients with a less-expensive alternative to Nvidia GPUs.
Wall Street estimates Amazon's earnings will increase at 18% annually over the next three years. That makes the current valuation of 32 times earnings look fair. The median target price of $300 per share implies 32% upside from the current share price of $226.
2. MercadoLibre: 41% upside implied by the median target price
MercadoLibre operates the largest online marketplace in Latin America, which is home to the fastest-growing e-commerce market in the world. The company will account for 30% of online retail sales in the region next year, up from 28.5% last year, according to eMarketer. Those market share gains are evidence of a powerful network effect.
MercadoLibre supercharges that network effect by providing adjacent merchant services for advertising, payments, and logistics. The company has achieved impressive scale in each industry. MercadoLibre is the largest retail advertiser and one of the most popular fintech platforms in Latin America; it also has the fastest and most extensive shipping network in the region.
Investors were disappointed with MercadoLibre's third-quarter earnings results. Increased costs related to free shipping in Brazil and scaling its credit card in Argentina hurt profits, dragging its operating margin to the lowest level since 2023. Those expenses may continue to pressure profits in the near term, but they also lay the foundation for long-term growth.
Wall Street estimates MercadoLibre's earnings will increase at 32% annually over the next three years. That makes the current valuation of 49 times earnings seem quite reasonable. Indeed, the median target price is $2,842 per share, implying 41% upside from the current share price of $2,015.
NYSE: CRCL
Key Data Points
3. Circle Internet Group: 43% upside implied by the median target price
Circle Internet Group mints the dollar-denominated stablecoin USDC. While USDC is the second-largest stablecoin by market capitalization behind Tether, it is the largest one that meets regulatory requirements in the United States and Europe. That has made USDC the preferred stablecoin among financial institutions, according to JPMorgan Chase.
Cross-border payments made through traditional systems can take days to settle, and they often incur high fees. Stablecoins reduce friction with faster settlement times and smaller transaction fees. Consequently, some analysts expect the stablecoin market to grow from $315 billion today to $2 trillion by 2030. Other analysts are even more optimistic.
Circle is required to back its stablecoins with assets denominated in fiat currency, meaning all USDC in circulation is backed by an equivalent amount of U.S. dollars and Treasuries. Revenue primarily comes from interest paid on those reserve assets, which means revenue is directly linked to circulating USDC volume. Circle expects that figure to increase at 40% annually in the years ahead.
Wall Street estimates Circle's revenue will increase at 32% annually through 2027. That makes the current valuation of 8.2 times sales look attractive. Indeed, most analysts think the stock is undervalued. The median target price $119 per share implies 43% upside from its current share price of $83.
4. Pure Storage: 41% upside implied by the median target price
Pure Storage builds all-flash storage systems and adjacent software that help enterprises manage data. Its products address block, file, and object storage, and they are built on DirectFlash technology, which eliminates bottlenecks and redundancies associated with traditional solid-state drives by letting software manage raw flash memory directly.
DirectFlash technology is a key differentiator. It lets Pure Storage build systems with two to three times the storage density and half the power consumption as the closest product on the market. But the company has also differentiated itself with Evergreen architecture, a subscription model that supports continuous hardware and software upgrades with zero downtime.
Importantly, consultancy Gartner recently recognized Pure Storage as a technology leader in enterprise storage platforms, suggesting the company is well positioned to benefit as the proliferation of artificial intelligence workloads drives demand for fast and efficient storage solutions.
Wall Street estimates Pure Storage's adjusted earnings will grow at 26% annually through fiscal 2027 (ends in January). That makes the current valuation of 45 times earnings look reasonable. The median target price of $100 per share implies 41% upside from the current share price of $71.
