- Goldman Sachs raised its 2026 year-end forecast for the S&P 500 index to 8,000.
- It gave strong corporate earnings as the reason for the prediction.
- The bank also raised its S&P 500 earnings-per-share forecasts for 2026
Goldman Sachs has raised its 2026 year-end forecast for the S&P 500 index from 7,600 to 8,000. The bank's forecast implies an increase of 6.4% from Tuesday's close of 7,519.12, Reuters reported.
Goldman Sachs has given one reason for its positive forecast- strong corporate earnings. "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," the bank said in a note on Tuesday.
Goldman Sachs also raised its S&P 500 earnings-per-share forecasts for 2026 to $340, predicting a 24% year-on-year growth. The brokerage forecast a further 13% increase in earnings-per-share for 2027 to $385.
As per the brokerage, AI infrastructure beneficiaries are set to drive about half of S&P 500's earnings growth this year. While elevated costs and weak consumer spending pose risks, Goldman Sachs believes that strong AI investments can offset these factors.
"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," Goldman Sachs analysts explained.
Goldman Sachs is not the only brokerage to present a bullish outlook in recent days. Last week, UBS said robust AI-driven earnings could help offset supply risks and inflationary pressures from the Iran conflict.
UBS also tripled its price target on Micron to $1,625, arguing that the AI boom has transformed the market for memory chips. The move helped Micron cross a $1 trillion market cap, becoming the 11th-largest US public company by market value, as per Yahoo! Finance. On Wednesday, Micron's shares were trading above $960 in pre-market.
The AI boom has led to a surge in stocks of chipmakers. After Micron, South Korean firm SK Hynix Inc. has also crossed the $1 trillion market cap benchmark. Shares of the chipmaker have jumped over 900% in the past year.
SK Hynix supplies HBM chips to Nvidia. As for Micron, the tech firm mainly produces memory chips to store and move data. A rise in the demand for AI means investors believe these firms will see more growth.
Apart from Micron and SK Hynix, South Korean electronics giant Samsung also entered the $1 trillion market cap club in May.
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