Goldman Sachs Sets Tone for US Stocks: Earnings Expansion Supports Upside Potential, S&P 500 Index Expected to Reach 7600 by Year-End

Goldman Sachs strategists believe there is still room for the U.S. stock market to rise. They expect the S&P 500 to reach 7,600 points by the end of 2026, driven by ongoing corporate earnings growth and moderate economic expansion. This forecast is based on in-depth analysis of the earnings outlook for component companies—further estimating that the S&P 500’s earnings per share will grow to about $309 in 2026 and to approximately $342 in 2027, with annual growth rates of about 12% and 10%, respectively.

According to Goldman Sachs’s latest “U.S. Weekly Kickstart” investment portfolio strategy report, this earnings growth supports corresponding price targets, implying a potential return of about 14% from current levels. This outlook reflects market confidence that corporate profitability will continue to expand, even with interest rates remaining high and financial conditions tightening slightly.

Technology Will Continue to Drive Earnings Growth

Technology companies remain the core engine of profit growth in the U.S. stock market. Goldman Sachs’s latest analysis shows that the information technology sector will contribute the most to S&P 500 earnings growth over the next few years—projecting earnings per share to jump from about $70 in 2025 to $92 in 2026, and further to $109 in 2027.

Other key sectors will also contribute significant gains, including financials, healthcare, and communication services. However, compared to the tech sector, earnings growth in these industries is expected to be more moderate.

Overall, the bank’s strategists expect the S&P 500’s earnings growth rate to be about 12% in 2026 and around 10% in 2027, consistent with the long-term expansion trend of U.S. corporate profits.

Valuations Remain High but Not Extreme

Despite the strong rise of the S&P 500 in recent years, Goldman Sachs still considers its valuation levels to be within a reasonable historical range. Currently, the index’s forward price-to-earnings ratio is about 21 times, close to its long-term average relative to historical distribution.

Valuation differences across sectors are particularly notable: industrials, utilities, and consumer staples are approaching the upper limits of their historical valuation ranges, while financials are relatively at the lower end.

This valuation structure suggests that, as economic growth expectations adjust dynamically, investors may accelerate sector rotation strategies.

Market Leadership Still Concentrated

The report further highlights the increasing concentration in the U.S. stock market. Goldman Sachs estimates that the top ten components of the S&P 500 account for 39% of the index’s market capitalization and about 31% of its earnings.

This concentration reflects the dominance of a few tech-driven companies—those benefiting deeply from long-term structural trends like artificial intelligence, cloud computing, and digital infrastructure.

Meanwhile, Goldman Sachs’s strategists emphasize that market breadth (the extent of advancing stocks) remains relatively narrow, indicating that only a limited number of stocks are truly driving the overall index higher.

Energy Leads Asset Returns This Year

Since the beginning of the year, energy-related investments have performed the best among various asset classes. Crude oil prices have surged about 70%, and energy stocks have risen nearly 30%. This increase far outpaces broader stock market benchmarks and significantly outperforms other major asset categories.

At the same time, gold and consumer staples have also shown strong gains, becoming market highlights. In contrast, growth stocks like technology and non-essential consumer goods have lagged in risk-adjusted performance.

Economic Growth Is Expected to Remain Stable

Goldman Sachs economists believe the U.S. economy will continue to expand at a moderate pace over the next few years. Their latest forecast shows real GDP growth of about 2.3% in 2026, slowing slightly to around 2.0% in 2027—aligning with market expectations. Regarding interest rates, Goldman Sachs expects the 10-year U.S. Treasury yield to gradually decline to about 4.1% over the next year.

Overall, this combination of economic and financial conditions has the potential to support continued stock market gains. While investors remain sensitive to inflation trends and monetary policy shifts, moderate economic growth coupled with gradually easing interest rates could provide dual support—fundamentals for earnings expansion and improved valuation attractiveness.