Why IBEX 35 Stock Could Keep Rising: Bullish Drivers Ahead

01. Historical Context

The rally still has room, but it now needs earnings and macro confirmation rather than a simple rerating

The IBEX 35 has already had a strong run. Yahoo Finance chart data show the index climbing from 8,163.3 on 31 May 2016 to 17,622.7 on 15 May 2026, a 115.88% price gain over ten years. Even after that rise, the benchmark still sits 5.12% below its 52-week high of 18,573.8. That makes the next bullish leg a continuation case, not a deep-value recovery case.

Data-based bullish visual for the IBEX 35 — The bullish case is a confirmation case: the index is close enough to prior highs that further upside needs resilient earnings, a still-growing Spanish economy, and inflation that does not get worse from here.

IBEX 35 framework across upside horizons

Horizon	What matters most	What would strengthen the bullish thesis	What would weaken the bullish thesis
1-3 months	Inflation path, ECB tone, and the 18,000 level	The index reclaims 18,000 while Spain inflation cools from April's levels	Inflation stays firm and the benchmark loses 17,000
6-12 months	Heavyweight earnings durability	Santander, BBVA, Iberdrola, and Inditex keep guidance intact and cash returns supportive	Profit growth slows while the rally depends mainly on multiple expansion
To 2027	Whether Spanish growth stays ahead of the euro area	Spain keeps expanding faster than peers while valuation remains below broader developed-market averages	Growth downgrades and sticky inflation arrive together

Index structure remains a major reason the bull case is still credible. BME's latest public factsheet shows Santander at 16.99% of the index, Iberdrola at 13.93%, BBVA at 13.05%, and Inditex at 11.91%, with the top four positions totaling 55.88%. When those companies are executing, the index does not need every sector to rally in order to make new highs.

Valuation is also still supportive relative to many alternatives. BME said on 16 January 2026 that Spanish equities were trading on 13 times earnings, 2.3 points below their 37-year average, with an average dividend yield of 4.1%. Public BME materials do not publish a clean live forward EPS estimate for the index, so the clearest public valuation anchors are still P/E and yield. Even so, those data suggest IBEX 35 is not priced like a crowded U.S.-style growth benchmark.

02. Key Forces

Five bullish forces that could extend the move

First, Spain is still growing. INE's flash estimate for the first quarter of 2026 showed GDP up 0.6% quarter on quarter and 2.7% year on year. Banco de España's March 2026 projections still call for 2.3% GDP growth this year, even after accounting for a tougher external backdrop. That matters because IBEX 35 does not need a boom to rally; it needs growth that is resilient enough to keep bank credit quality, consumer demand, and utility investment plans intact.

Second, the index heavyweights are still delivering hard numbers. Santander reported first-quarter underlying profit of EUR 3.6 billion, revenue up 4%, costs down 3%, and underlying EPS up 17%. BBVA reported attributable profit of EUR 2.989 billion, up 10.8% in current euros. Iberdrola's adjusted net profit rose 11% to EUR 1.865 billion and management lifted 2026 adjusted net profit growth guidance to more than 8%. Inditex reported 2025 revenue of EUR 39.9 billion, net profit of EUR 6.2 billion, and continuing investment in stores, logistics, and technology. That is the kind of earnings base that can keep an index bid even when the macro backdrop is not perfect.

Third, valuation still helps the relative case. J.P. Morgan Asset Management says Europe ex-UK trades on about 16x forward earnings versus 23x for the U.S., while European banks trade at 1.1x price-to-book and offer about 8% shareholder yield. That is relevant because financials make up 36.34% of IBEX 35. If European bank earnings remain constructive, Spain's benchmark retains one of its clearest support pillars.

Fourth, the benchmark's sector mix can work in its favour. Oil and energy account for 20.04% of the index and technology and telecommunications another 12.56%. That means IBEX 35 can benefit both from stable energy cash flows and from continued investment in digital and network infrastructure, even if domestic consumer momentum is mixed.

Fifth, the price trend still has room without demanding a dramatic rerating. At 17,622.7 the index is close enough to challenge 18,573.8, but not already above it. If the next results season confirms that the largest constituents are still compounding profits, a move back to fresh highs does not require heroic assumptions.

Five-factor scoring lens for the rally case

Factor	Why it matters	Current assessment	Bias
Growth backdrop	Supports loan demand, consumer spending, and capex	Spain GDP grew 0.6% qoq and 2.7% yoy in Q1 2026; Banco de España still projects 2.3% for 2026	Neutral to bullish
Heavyweight earnings	The top few names drive much of the benchmark	Santander, BBVA, Iberdrola, and Inditex all reported supportive recent numbers	Bullish
Valuation	Controls how much upside is already priced	BME's reference point is 13x earnings and 4.1% dividend yield	Bullish
Sector mix	Banks and utilities can keep carrying the index if they execute	Financials are 36.34% of the index and the top four stocks total 55.88%	Neutral to bullish
Inflation and rates	Multiple expansion needs inflation not to worsen from here	Spain CPI is 3.2%, Spain HICP 3.5%, and the ECB deposit facility is 2.00%	Neutral

The strongest version of the bull case is therefore not a speculative one. It is a cash-flow case in which Spain keeps growing, the largest index weights keep earning, and valuation remains attractive enough to draw incremental capital.

03. Countercase

What could interrupt the rally

The clearest risk is inflation persistence. INE said Spain's CPI annual rate was 3.2% in April 2026 and HICP was 3.5%, while Eurostat put euro area inflation at 3.0% with energy inflation at 10.9%. That matters because the bullish case is stronger if the ECB can keep policy from becoming more restrictive, not if investors have to price another inflation scare.

The second risk is that growth slows faster than the current earnings base suggests. Banco de España still expects GDP growth to decelerate to 1.7% in 2027. If bank lending, consumer demand, or corporate capex start reflecting that slowdown earlier than expected, current optimism around the major constituents could fade.

The third risk is concentration. The same structure that helps the upside can hurt it. With the top four stocks accounting for 55.88% of the benchmark, a simultaneous wobble in the banks and Iberdrola or Inditex can turn a healthy rally into an index-level stall quickly.

Current risks to the bullish case

Risk	Latest data point	Why it matters	Current assessment
Sticky inflation	Spain CPI 3.2%, Spain HICP 3.5%, euro area inflation 3.0%	Can delay further policy relief and limit multiple expansion	Bearish
ECB rate floor	Deposit facility 2.00%, main refinancing operations 2.15%	Shows policy is not yet loose enough to support a blind rerating	Neutral to bearish
Growth deceleration	Banco de España projects 2.3% GDP growth in 2026 and 1.7% in 2027	Raises the hurdle for cyclical earnings to keep surprising positively	Neutral
Index concentration	Top four stocks total 55.88% of the benchmark	Rallies become fragile if a few leaders stop working	Bearish
Near-high setup	The index is only 5.12% below its 52-week high	There is less room for disappointment than in a washed-out market	Neutral

The bullish setup remains credible only if these risks stay separate. The rally becomes much less durable when sticky inflation, slower growth, and narrow leadership start reinforcing one another.

04. Institutional Lens

What professional research implies for further upside

The institutional backdrop is constructive, but not euphoric. Banco de España still sees Spain growing faster than many euro area peers. J.P. Morgan Asset Management says Europe's 2026 EPS estimate is now being revised up after seven months of cuts and that European banks remain attractively valued at 1.1x book with about 8% shareholder yield. BME argues Spanish equities remain cheap relative to history and relative to many other developed markets.

None of those points amounts to an official IBEX 35 target. Together, however, they form a coherent framework for the bull case: Spain does not need a major multiple expansion to move higher if earnings revisions stay constructive and the benchmark's heavyweights keep compounding profits.

Institutional lens for the bullish case

Source	What it said	Date	Read-through for IBEX 35
Banco de España	Projects Spain GDP growth of 2.3% in 2026, HICP of 3.0%, and unemployment of 9.9%	27 March 2026	Supportive for equities as long as inflation does not worsen and earnings hold
INE	Q1 2026 GDP grew 0.6% quarter on quarter and 2.7% year on year	30 April 2026 flash estimate page	Confirms the year started with stronger activity than a bearish macro call would imply
BME / Spain Investors Day	Spanish equities were trading on 13x earnings, 2.3 points below their 37-year average, with a 4.1% average dividend yield	16 January 2026	Valuation still gives the benchmark room to rally if profits keep coming through
J.P. Morgan Asset Management	Europe's 2026 EPS estimate is now being revised up; Europe ex-UK trades on 16x forward earnings; European banks trade at 1.1x book and offer 8% shareholder yield	2026 outlook page available in May 2026	Directly helpful for IBEX 35 because banks dominate the index and European earnings breadth is improving
ECB	Deposit facility rate remains at 2.00%	ECB rates page viewed in May 2026	Policy is no longer restrictive enough to kill the rally, but not easy enough to replace weak earnings

The common message is measured but positive. IBEX 35 can keep rising, but the move is strongest when it is carried by banks, utilities, and consumer leaders delivering real earnings rather than by a pure sentiment chase.

05. Scenarios

Actionable 6 to 12 month upside scenarios

The ranges below are author estimates built from the current IBEX 35 level, the 52-week range, BME's January 2026 valuation reference, Spain's Q1 GDP, the April inflation data, Banco de España's macro projections, and the recent results of the benchmark's heaviest constituents. They are not third-party index targets.

IBEX 35 bullish scenarios

Scenario	Probability	Range	Trigger conditions	When to review
Bull	45%	18,400-19,200	The benchmark reclaims 18,000, Spain inflation cools from April's 3.2% CPI and 3.5% HICP rates, and heavyweight guidance from Santander, BBVA, Iberdrola, and Inditex stays intact through the next reporting cycle	Review after each INE inflation release, ECB update, and the July-August 2026 earnings window
Base	35%	17,200-18,400	Growth stays positive but slower, policy remains stable, and the benchmark holds above 17,000 without a clean breakout	Review monthly and after each major heavyweight results release
Bear	20%	16,000-17,200	Inflation stays sticky, the index loses 17,000, and at least one of the main earnings anchors disappoints	Review immediately on a decisive break below 17,000 or a fresh upside inflation surprise

The tactical message is simple. Buyers should want confirmation above 18,000 and continued earnings support before assuming a durable breakout. Existing holders can stay constructive because the earnings base is still healthy and valuation is still reasonable, but the position is strongest when those supports remain visible.

If the data cooperate, IBEX 35 can retest and modestly exceed its prior high. If they do not, the more likely result is a range trade while inflation and earnings fight for control of the narrative.

References