Goldman Sachs strategists have joined their colleagues at Morgan Stanley and Deutsche Bank in forecasting a 17% return for the S&P 500 index by the end of the year, Bloomberg reports.
Growing corporate profits, fueled by the AI boom, will drive further stock gains, said the Goldman team, led by Ben Snyder, raising the year-end target for the U.S. benchmark index to 8,000 from the previous 7,600.
"Continued earnings growth should drive further equity market gains," the strategists wrote in a research note. "The earnings outlook upgrade reflects upward revisions to S&P 500 earnings estimates following an exceptionally strong first-quarter earnings season."
The S&P 500 has already gained nearly 10% year-to-date, thanks to a rally in tech stocks, as investors prioritize strong corporate results over the geopolitical and economic fallout from the war with Iran. On Tuesday, the U.S. benchmark index hit a new all-time high.
Goldman strategists also raised their earnings per share (EPS) forecast for S&P 500 companies to $340 for 2026, implying 24% annualized growth. They forecast a further 13% increase for 2027.
The strategists estimate that beneficiaries of AI infrastructure investments will account for approximately half of the S&P 500's EPS growth this year. However, the upside multiples will be constrained by risks to the economic outlook.
"The combination of slowing earnings growth and ongoing uncertainty around both AI and the macroeconomic outlook should prevent a significant upside multiple," the strategists wrote. "AI sentiment and interest rates create risks in both directions."