Ed Yardeni is holding firm through the AI bubble debate. On Squawk Box, the veteran strategist and president of Yardeni Research argued that the current market rally rests on earnings, and he reiterated an aggressive S&P 500 target of 8250 by the end of 2026. The benchmark closed last week at 744.78 on the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) proxy, leaving room for a double-digit second-half rally if Yardeni’s math holds.
The FEMA Thesis
Yardeni’s shorthand for the tape is FEMA: “fabulous earnings momentum” rather than FOMO. “This market’s got earnings power behind it, not just valuation and hype,” he said. That framing lines up with the macro picture. Bureau of Economic Analysis data show total U.S. corporate profits reached $4,426.5 billion in Q1 2026, up 12.8% year over year, an acceleration from 9.6% in Q4 2025. Information technology profits climbed to $352.5 billion, up from $271.0 billion a year earlier, giving weight to the AI-productivity story.
The labor market backdrop is cooler but still expanding.
The June jobs report showed payroll growth of 57,000—roughly half the consensus forecast—while total nonfarm payroll employment rose to a record 158.984 million. Ed Yardeni noted that the three-month average gain of 111,000 jobs remains above the estimated break-even pace needed to keep up with labor force growth, suggesting the labor market continues to expand and recession fears remain contained.
The Math Behind 8,250
Yardeni walked through the arithmetic himself. “Analysts are projecting that earnings next year for the S&P 500 will be $400 a share. And they’ve been raising that number,” he said. Apply the current 20x multiple to that figure, and you get 8,000. Yardeni thinks earnings run hotter than consensus, so he rounds up to 8,250 by year-end.
Valuation remains the key variable. Yardeni’s outlook implicitly assumes Treasury yields stabilize rather than move materially higher and that earnings estimates continue to improve through the fourth quarter.
The Roaring 2020s Extension
Yardeni extends the call beyond 2026. “I think by the end of the decade we’ll be at 10,000,” he said, extending his “roaring 2020s” framework. The productivity catalyst he keeps pointing to is autonomous transportation. “We haven’t seen a situation where you can just call a car, and it shows up without a driver. And that, I mean, you think the revolutionary impact of that, all these cars sitting in driveways and parking lots,” he said, framing capital-efficiency gains as the next leg of the AI trade.
On the AI-is-real point, Yardeni leaned on personal use. “AI, I think, is the real deal. I use it all the time. I used to use Google search. Now I use Claude and Gemini, and it’s a very, very powerful research assistant,” he said.
In addition, Yardeni has argued that any meaningful pullback would represent a buying opportunity rather than a reason to abandon his broader bullish thesis. For investors, the key variables remain clear: whether consensus earnings estimates for 2027 continue to move higher, whether the 10-year Treasury yield stabilizes near current levels, and whether AI-driven productivity gains begin to translate into measurable revenue growth outside the technology sector. If those conditions persist, Yardeni’s 8,250 target for the S&P 500 remains plausible. If one or more begin to deteriorate, investors are likely to reassess whether a 20-times earnings multiple remains justified.
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