Finbold·2025-12-14 18:50Core Viewpoint - Goldman Sachs projects that the S&P 500 will surpass 7,600 by 2026, driven by expanding corporate earnings and accelerated AI adoption across the economy [1][3]. Group 1: S&P 500 Projections - Goldman Sachs raised its outlook for U.S. equities, forecasting an 11% growth from the last closing value of 6,827 to approximately 7,600 by 2026 [2]. - Morgan Stanley is even more optimistic, predicting the S&P 500 will reach 7,800 by the end of 2026, attributing recent market corrections to valuation pressures rather than weakening fundamentals [6]. Group 2: Earnings Growth - S&P 500 earnings per share are expected to increase by 12% in 2026 to about $305, with an additional 10% rise anticipated in 2027 [3]. - Productivity gains from AI are projected to contribute significantly to earnings growth, adding an estimated 0.4% in 2026 and 1.5% in 2027 [3]. Group 3: Key Contributors to Growth - Mega-cap technology stocks are expected to be the primary drivers of profit growth, with firms like Nvidia, Apple, Microsoft, Alphabet, Amazon, Broadcom, and Meta projected to account for roughly 46% of total earnings expansion in 2026 [4]. - There is an expectation of improving earnings momentum across the broader index, indicating a gradual expansion beyond just Big Tech [4]. Group 4: Market Sentiment and Risks - Despite a constructive outlook, potential risks include slower-than-expected Federal Reserve easing and pressure on corporate margins [5]. - Other Wall Street strategists generally expect the S&P 500 to trade near or above 7,000 in the medium term, although concerns about stretched valuations in large technology stocks and the risk of an AI-driven bubble remain [7].