Goldman Sachs Inc. said in a note on Monday that it expects the U.S. stock market to continue its upward trend, with analyst Ben Snider setting a year-end target of 7,600 for the S&P 500, implying a rise of about 7%.
The forecast includes earnings per share growth of 12% in 2026 and 10% in 2027, while keeping the index's price-to-earnings ratio close to its current level of 21 times.
Snyder wrote: The U.S. stock market should continue to set new highs in the coming months, supported by continued earnings growth.
Goldman Sachs Inc. noted that the S&P 500 has risen 12% since 30/03, one of its strongest gains since April 2020, in line with historic recoveries and improved geopolitical prospects.
The bank noted that investor sentiment had recovered to pre-war levels, although positions remained below previous peaks.
Regarding earnings, Goldman Sachs Inc. said its consensus earnings per share estimates for 2026 and 2027 have risen 4% since late January, supported by investment spending on artificial intelligence.
The bank estimates that artificial intelligence will drive about 40% of the S&P 500's earnings per share growth this year, with capital expenditure guidance for major cloud computing companies expected to be a key focus during the current earnings season.
Within the stock market, Goldman Sachs Inc. recommends leaning towards long-term growth companies that have their own earnings winds and limited risk from AI disruption, with a particular focus on companies involved in energy infrastructure investment.
The bank cited narrowing market breadth as a major risk, noting that it had fallen to one of its narrowest levels since the dot-com bubble.
Goldman Sachs Inc. believes that the beneficiaries of investment spending on artificial intelligence remain the clearest opportunity in the AI ecosystem.
