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Goldman Sachs raises S&P 500 year-end target to 8000, citing strong earnings growth driven by AI capex
Goldman Sachs strategists have raised their S&P 500 year-end target to 8000, up from 7600, joining Morgan Stanley and Deutsche Bank in projecting a 17 percent return for 2026. The upgrade is driven by 24 percent earnings growth powered by AI capital expenditure, as markets hit all-time highs with a fifth consecutive day of gains.
Goldman Sachs strategists have raised their year-end target for the S&P 500 index to 8000, up from the previous forecast of 7600, projecting a 17 percent total return for 2026. The investment bank joins peers Morgan Stanley and Deutsche Bank in setting similarly ambitious targets, reflecting growing confidence on Wall Street that the current rally has further room to run. The upgrade was led by Goldman strategist Ben Snyder, who cited stronger-than-expected earnings growth as the primary driver.
According to Goldman's analysis, the market has been consistently underestimating the earnings growth potential of S&P 500 companies, particularly those benefiting from the artificial intelligence capital expenditure boom. The bank projects 24 percent earnings growth for 2026, followed by a further 13 percent expansion in 2027. Snyder emphasised that earnings have been growing faster than share prices have been rising, creating what he described as a fundamental justification for continued upside.
The upgrade comes as markets continue to trade at all-time highs, with the S&P 500 recording its fifth consecutive day of gains. The semiconductor sector has been a standout performer, with chip makers leading what Bloomberg described as a face-ripping rally. Companies like Micron and SK Hynix have seen massive gains, and UBS recently raised its Micron price target by more than 200 percent to keep pace with the stock's ascent. The Nasdaq futures were up more than half a percent on the session.
Supporting the bullish sentiment, the 10-year Treasury yield has declined to 4.47 percent, providing a helpful backdrop for equity valuations. Meanwhile, Brent crude oil has fallen below 96 dollars per barrel to 95.83 dollars, easing inflationary pressures and potentially benefiting the smaller and mid-cap companies that have higher energy input costs. Market analysts suggest that a resolution to the Iran-US conflict could be the catalyst needed for the rally to broaden out beyond the technology sector.
Not all strategists are equally optimistic, however. Some portfolio managers have warned that the concentration of gains in a handful of semiconductor and technology stocks represents a risk, and that the market may be primed for a correction if sentiment shifts. Jamie Dimon, CEO of JP Morgan, also struck a cautionary tone at a Bernstein conference, stating that he believes the bank is currently over-earning due to elevated market volatility. Nonetheless, with at least eight banks in the Bloomberg survey targeting 8000 or higher, the bullish consensus on Wall Street appears firmly entrenched for the remainder of 2026.