Sell-side analysts on Wall Street have never been this bullish — at least not since 2010. Data released by FactSet in late September shows that 59.9% of the 13,097 analyst ratings on S&P 500 stocks are Buy ratings, the highest month-end share since at least 2010 and well above the five-year average of 55.9%. Holds account for 35.5%; Sells just 4.7%.
In its report on where analysts are most optimistic heading into the fourth quarter, FactSet said the 59.9% Buy share is the highest month-end reading in its records going back to 2010. European asset manager Exante independently confirmed the figure in its September market review, calling it the highest month-end Buy proportion since at least 2010. A separate FactSet Earnings Insight report from September 18 put the Buy share at 59.3% across 13,038 ratings — also near historic highs.
The optimism is concentrated in the AI trade. Communication Services and Technology each carry 70% Buy ratings, the highest of the 11 sectors, according to FactSet. The market expects third-quarter corporate earnings to grow roughly 30% year over year, powered by AI capital spending.
Analysts are backing their ratings with aggressive targets. FactSet's bottom-up aggregate S&P 500 price target stands at 9,260.67 — 21.2% above the 7,637.76 close it was measured against. Strategists are similarly upbeat: HSBC raised its year-end S&P target to 8,100 from 7,650 in September, RBC Capital maintained 8,150, and Fundstrat's Tom Lee sees the index "easily above 8,200" by year-end.
The buy side, though, has already started to hedge. Bank of America's fund manager survey showed near-record bullishness in August — cash at just 3.5%, equity allocations at a five-year high. But the September survey showed cash back up to 3.9% and net equity overweight down to 49% from 56%. The Bull & Bear indicator hit 9.5, above the 8.0 contrarian sell-signal line. Managers' top tail risk is now a "disorderly rise in bond yields" (33%), overtaking the "AI bubble" (28%).
Main Street isn't buying it. The American Association of Individual Investors' survey for the week ending September 30 showed just 34.6% bulls versus 46.5% bears, with bearish readings above average for 34 straight weeks. And one of Wall Street's most bullish strategists, Ed Yardeni of Yardeni Research, cut his 2026 year-end S&P target from 8,400 to 7,900 in September and raised his odds of a bear market from 20% to 30%.
The backdrop is a market of extremes: the Nasdaq closed at a record 27,477 on October 5, while the 10-year Treasury yield closed at 5.31%, its highest since April 2002. Third-quarter earnings season will now test whether analysts' record optimism is prescience — or a sentiment peak.