Despite inflation staying stubbornly above 3%, AI reshaping the labor market, and political uncertainty heading into 2026, Wall Street veteran analyst Ed Yardeni still sees a bull market marching on—and he's not backing off his bold thesis of a decade-long boom.
In his latest Tuesday note, Yardeni sounded as confident as ever, describing 2026 as "just another year of the Roaring 2020s," a term he coined back in 2020 when the U.S. economy was just beginning to emerge from the pandemic's grip.
Now, with GDP, consumption and corporate profits all sitting at record highs, he says the data supports the idea that the decade-long rally still has legs.
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A Boom Fueled by Brains, Not Brawn
Back in 2020, Yardeni predicted that the post-COVID era would mirror the Roaring 1920s, powered this time not by electricity or automobiles but by a new wave of technology that "supplements or replaces the brain."
“Today's innovations produced by the IT industry are revolutionizing lots of other ones, including manufacturing, energy, transportation, healthcare, and education,” Yardeni wrote.
He credits what BCA Research dubbed the BRAIN Revolution—biotech, robotics, artificial intelligence and nanotech—as the backbone of the modern productivity boom.
And that productivity story is the cornerstone of his 2026 outlook. Yardeni expects real GDP to grow 3% next year, with productivity rising 2.5%, even as employment and labor force growth slow to just 0.5%.
While the job market may appear weaker on the surface—especially for new college grads—he believes rising output per worker will keep the economy on a firm footing.
“The unemployment rate is likely to end this year at 4.5%, primarily because of the rising jobless rate among recent college graduates due to the rapid proliferation of AI. The same may be said about 2026,” he said.
S&P 500: The Road to 10,000
Yardeni's stock market forecast remains one of the most optimistic on Wall Street.
He expects S&P 500 operating earnings per share to rise from $268 in 2025 to $310 in 2026, eventually climbing to $450 by 2029.
Assuming the market maintains a forward price-to-earnings ratio between 18 and 22, he projects the index – as tracked by the Vanguard S&P 500 ETF (NYSE:VOO) – could reach 9,000 to 11,000 by the end of the decade.
"Let's split the difference and aim for 10,000 by the end of the Roaring 2020s," Yardeni said.
That would be a 210% gain from the 2019 close of 3,230—a return magnitude seen in multiple past decades.
Yardeni isn't calling for the collapse of the AI trade, but he believes the recent concentration in mega-cap tech stocks is unsustainable. "Almost all the bubble is in the Information Technology and Communication Services sectors," he said, which together now make up 45% of S&P 500 market cap.
Instead of overweighting those sectors, Yardeni recommends a more balanced allocation, with increased exposure to financials, industrials, and health care, which he now sees as a rising star heading into 2026.
Disinflation, Not Recession
While the Fed continues to battle inflation, Yardeni indicates the economy may be naturally disinflating thanks to stronger productivity growth.
He highlights that unit labor costs, a key driver of wage inflation, rose just 2.5% year-over-year in the second quarter, and could fall further in 2026. If that happens, he says, the Fed may finally hit its 2.0% inflation target next year.
His base-case for monetary policy includes one rate cut in 2026, which would bring the federal funds rate to 3.50%-3.75%, with 10-year yields remaining in the 4%-5% range—levels he views as "neutral," neither stimulative nor restrictive.
Yardeni also expects the Federal Reserve to become more independent in 2026, even though President Donald Trump is likely to appoint a dovish replacement for Jerome Powell when his term ends in May.
Gold Glitters, Bitcoin Cracks
Yardeni remains bullish on gold, calling for a jump to $5,000 by the end of 2026 and $10,000 by 2029, driven by central bank buying, Chinese retail demand, and geopolitical uncertainty.
But his view on Bitcoin (CRYPTO: BTC) is far less rosy. The 2025 GENIUS Act opened the door for stablecoins to be used in payments, removing one of bitcoin's core use cases.
"The recent severe selloff suggests that it might be digital fools' gold," Yardeni said.
He expects another rough year ahead for Michael Saylor's Strategy Inc. (NASDAQ:MSTR), which holds a large bitcoin position.
While past dips have been buying opportunities, he doesn't see a compelling reason to buy this time.
Can The Party Really Last?
Ever since Yardeni first floated his “Roaring 2020s” thesis, skeptics have asked whether a roaring decade must end in a crash. After all, that’s what happened in the 1930s. Yardeni's answer: not necessarily.
"Trump's tariffs have already stress-tested the U.S. and global economies for a 1930s-style Smoot-Hawley scenario without much signs of stress," he said.
And if the BRAIN Revolution keeps driving productivity and profits, the party could last well into the next decade.
As long as productivity keeps rising, growth will follow—even if jobs and inflation don't behave like they used to, according to the expert.
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