The S&P 500 Is Expected to Rally 12% This Year
Goldman Sachs••business
Key Points:
- Goldman Sachs forecasts continued strong US stock earnings growth driven by healthy economic expansion, profit strength among top US companies, and rising productivity from AI adoption, supporting a sustained bull market.
- Despite this optimism, US stock valuations are elevated, with the S&P 500 trading at a forward P/E ratio of 22x, near historic highs, increasing downside risks if earnings fall short of expectations.
- Market concentration in a few large tech companies is at record levels, contributing significantly to recent returns but also raising idiosyncratic risks and investor dependence on these firms' performance.
- Key risks for 2026 include potential weaker economic growth or a hawkish Federal Reserve, though current forecasts predict steady GDP growth and rate cuts; AI investment growth is
