Goldman Sachs Raises S&P 500 Year-End Target on Strong Earnings Growth

Goldman Sachs has increased its year-end target for the S&P 500 index to 8,000 from its previous forecast of 7,600, citing a stronger-than-expected corporate earnings season and improving profit expectations.

In a note released on Wednesday, Goldman Sachs strategist Ben Snider said continued earnings growth could help drive the benchmark index another 6% higher from current levels, although the bank warned that market volatility and several macroeconomic risks could create a more challenging path ahead.

Goldman Sachs Upgrades Earnings Forecasts

The investment bank also raised its earnings per share (EPS) projections for S&P 500 companies over the next two years.

Goldman now expects S&P 500 EPS to reach $340 in 2026, representing annual growth of 24%. For 2027, the bank forecasts earnings of $385 per share, reflecting an additional 13% increase.

According to the firm, companies benefiting from artificial intelligence infrastructure spending are expected to generate roughly half of the S&P 500’s total earnings growth this year.

AI Infrastructure Remains a Major Growth Driver

Goldman Sachs continues to see strong opportunities within the artificial intelligence sector, particularly among hyperscalers and power infrastructure companies involved in the AI expansion cycle.

The bank noted that stocks experiencing the strongest upward earnings revisions have generally outperformed the broader market throughout the year.

The continued surge in AI-related investment remains one of the key bullish themes supporting the broader equity market.

Valuation Expansion May Be Limited

Despite the optimistic earnings outlook, Goldman Sachs does not expect further valuation expansion to significantly drive market gains from current levels.

The bank pointed out that the S&P 500 forward price-to-earnings ratio has already declined by 4% year-to-date, even while the index itself has climbed around 10%.

Goldman’s forecasts assume the valuation multiple remains near the current level of approximately 21x forward earnings.

Risks Could Create a More Volatile Market Environment

While maintaining a constructive long-term outlook, Goldman Sachs also highlighted several important risks facing the market.

Ben Snider warned that rising oil prices and geopolitical tensions could create a combination of slowing economic growth and tighter financial conditions — conditions that have historically marked the later stages of previous bull markets.

The bank also cautioned that the strong outperformance of AI infrastructure stocks may raise expectations significantly, making future gains more difficult to sustain.

In the near term, Goldman believes the recent momentum-driven rally and historical midterm election seasonality could lead to more moderate market returns in the coming months.