Despite three consecutive years of 15%+ gains from the S&P 500 (^GSPC 1.18%), most investors believe the good times aren't over yet.
The Motley Fool's 2026 Investor Outlook and Predictions Report shows that the majority of investors expect further gains in U.S. stocks this year, powered again by enthusiasm around artificial intelligence (AI) stocks.
Expectations for positive returns in the new year aren't unusual. What was a bit surprising, however, was how few people expected any kind of significant decline along the way. This comes even though a large number of respondents cited recession and inflation risk as key factors to watch in the new year.
Let's take a look at some of the survey's major findings and how you can use them to shape your own plans for 2026.
Image source: Getty Images.
Most individual investors (68%) predict stock market gains in 2026
The report's key takeaway shows that investors have bullish, albeit relatively modest, expectations for the current year.
In all, approximately 68% of investors expect the market to produce positive returns in 2026. Those in the younger Gen Z and millennial generations could help drive this growth. Roughly 68% and 64% of these groups, respectively, plan to invest more this year.
However, most investors don't expect the big double-digit returns that the equity markets have seen over the past few years. Only 11% of those surveyed expect to see a fourth consecutive year of 10%+ returns. The bulk of responders, about 57% in total, think stocks will return between 4% and 9% this year.
Overall, investors remain in a bullish mood, but expectations are relatively contained. As geopolitical and affordability concerns loom over a U.S. economy that still appears to be in relatively good shape, there could be a belief that AI-driven market gains could start to moderate.
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Key Data Points
Only 3% of individual investors anticipate a market decline of 10% or worse
Historically, the market experiences a 10% correction roughly once every two to three years.
The last few times this occurred were:
- 2025 (the lead-up to "Liberation Day" tariffs)
- 2022 (inflation-driven bear market)
- 2020 (COVID-19 pandemic)
- 2018 (fear of a potential Europe recession)
Survey respondents don't seem particularly concerned that we'll experience another one in 2026. Only 3% of those asked think we'll see a correction this year.
In one sector, we've already come pretty close to hitting that mark. On Feb. 5, the Vanguard Information Technology ETF was down nearly 9% year to date. It has since recovered more than half of that decline, but it suggests that the markets could potentially be vulnerable to pullbacks.
Overall, the resilience of the broader U.S. economy doesn't appear to be dampening the general expectation that the market could keep trending higher in 2026.
AI investors are slightly more bullish
Perhaps it shouldn't be surprising that those folks who've ridden the bull market in AI stocks are more bullish than average.
Within this subgroup, the survey found that a similar 11% of respondents felt the market was due for another year of 10%+ returns. However, a slightly higher 64% of AI investors felt that the market would deliver 4% to 9% gains.
Since AI stocks have been one of the best-performing market segments of the past few years, this is a reasonable survey result.
Interpretation of survey results
Following three straight years of double-digit returns and only one meaningful stock market correction during that timeframe, it's to be expected that investors are largely carrying their bullish expectations forward into 2026.
The fact that only about one in 10 survey respondents thinks that the stock market will gain at least 10% this year suggests an overall lack of overconfidence. On the flip side, almost no one is calling for even a 10% decline in stocks. That could be a potential dangerous spot if most investors think there's little risk of losses this year.
Overall, this year's survey results suggest an ongoing confidence in the U.S. economy and the ability of the stock market to continue producing gains. Current sentiment remains positive, and the majority of people feel that 2026 will be another good year for investors.
