The revised target implies a potential upside of about 6.4%, highlighting the brokerage’s growing confidence in the strength of the U.S. corporate sector despite concerns around inflation, geopolitical tensions, and slowing consumer demand.
According to Reuters, Goldman Sachs believes earnings growth has been the primary force behind the market’s rally this year and expects the trend to continue in the months ahead. The brokerage noted that rising profits, rather than valuation expansion, have largely powered gains in the benchmark index.
The Wall Street firm also upgraded its earnings-per-share estimates for the S&P 500. Goldman now expects earnings to reach $340 in 2026, representing a projected annual growth of 24%, while forecasts for 2027 were lifted to $385 per share, implying another 13% increase.
The bullish revision adds to a broader wave of optimistic calls from major brokerages. UBS Global Wealth Management also raised its market outlook recently, pointing to robust AI-driven earnings growth that could help offset inflationary pressures and supply-chain risks linked to the ongoing Iran conflict.
Goldman Sachs expects companies tied to AI infrastructure development, particularly semiconductor and technology firms, to remain key contributors to earnings growth. The brokerage estimates that AI-related beneficiaries could account for nearly half of the S&P 500’s earnings expansion this year.While Goldman acknowledged risks from softer consumer spending and elevated operational costs, it believes strong investment in AI technologies and infrastructure will continue to support profitability across major sectors.Goldman analysts observed earnings estimates for the broader index rising faster than stock prices in recent months, while semiconductor companies central to the AI boom have continued to outperform even their improving earnings outlooks.
The latest forecast underscores how deeply AI enthusiasm has become embedded in Wall Street’s expectations for future corporate growth and market performance.
