NEW YORK: Strategists at Goldman Sachs Group Inc joined peers at Morgan Stanley and Deutsche Bank AG in seeing a 17% return for the S&P 500 Index this year.
Earnings growth powered by the artificial intelligence (AI) boom will drive further gains in stocks, the Goldman team led by Ben Snider said as they increased their year-end target for the US benchmark to 8,000 points, ditching a previous forecast of 7,600.
“Continued earnings growth should drive continued equity market upside,” the strategists wrote in a note.
“The increased return forecast reflects increased estimates for S&P 500 earnings following an exceptionally strong first quarter reporting season.”
The S&P 500 has already jumped almost 10% this year thanks to a rally in tech stocks as investors prioritse strong earnings over the geopolitical and economic fallout from the Iran war.
The US benchmark hit its latest record high on Tuesday.
The Goldman strategists also increased their earnings-per-share forecast for companies in the S&P 500 to US$340 for 2026, signalling year-on-year growth of 24%.
They project a further increase of 13% for 2027.
Beneficiaries of AI infrastructure investment should account for roughly half of S&P 500 EPS growth this year, the strategists said.
“The combination of decelerating earnings growth and continued uncertainty around both artificial intelligence and the macroeconomic outlook should prevent a major increase in valuations,” the strategists wrote. — Bloomberg
