Goldman Sachs, one of the world's largest institutional brokerages has lifted S&P 500's year-end forecast for 2026 to 8,000 from 7,600, on the back of continuous strong corporate earnings.
Wall Street benchmark S&P 500 hit fresh record after record in 2026, despite headwinds from the on-going turmoil in the Gulf between the United States and Iran. The new forecast implies a 6.4% increase from S&P's last close of 7,519.12.
Notably, while earnings have remained robust across the board, financial performances of semiconductor companies have exceeded their forward earnings.
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"In addition, while S&P 500 earnings estimates have risen more quickly than index price appreciation, the semiconductor stocks at the heart of the AI infrastructure complex have recently outpaced their forward earnings," analysts at Goldman Sachs outlined in the research note.
The brokerage highlighted that AI infrastructure beneficiaries are on track to drive about half of the index's earnings growth this year, even as weak consumer spending and elevated inflation weight on the S&P 500. GS underscored that the impact of these headwinds will most likely be offset by strong AI investments.
Goldman Sachs stated that it expects the dynamic earnings growth momentum to continue in the coming months and power the index, and is therefore, raising the forecast for the S&P 500.
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"Earnings growth has powered the entire S&P 500 return so far this year, and we expect this dynamic to continue in the coming months," Goldman Sachs said in its note.
The brokerage has also raised its S&P 500 earnings-per-share forecasts to $340 for 2026, indicating a 24% year-on-year jump, and to $385 for 2027, an additional 13% increase.
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