The Goldman Sachs Group, Inc.

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The Goldman Sachs Group, Inc. stock analysis GS overview
Bullish +75

US Stocks Are Forecast to Rise 6% in 2026 - Goldman Sachs

📈 Goldman Sachs forecasts US stocks will rise 6% in 2026, reaching an S&P 500 year-end target of 7,600.

💼 Ben Snider, chief US equity strategist, attributes the outlook to ongoing corporate earnings growth with expectations for 12% EPS growth in 2026.

📊 Current P/E multiples stand at roughly 21 times, slightly below January 2026 levels but near the five-year average.

⚠️ Valuations remain high compared to long-run history as the P/E ratio is higher than in 87% of the past 40 years.

🏛️ Goldman Sachs notes corporate confidence is solid despite mixed surveys, evidenced by record $422 billion in share buyback authorizations year-to-date.

🤖 AI-related investment is expected to drive approximately 40% of S&P 500 EPS growth this year, with consensus capital expenditure estimates for cloud infrastructure rising $130 billion.

⚖️ The AI boom provides an earnings boost but also creates uncertainty that has compressed valuations across much of the market.

📉 Market breadth has narrowed to one of its lowest levels since the dotcom era, raising caution despite bullish headline numbers.

🌍 Goldman Sachs Research identifies the war in Iran and the AI buildout as the clearest equity market risks in coming weeks.

🔧 Retail traders are expected to gain enthusiasm from the relaxation of Pattern Day Trader rules following minimum equity requirement changes.

💰 A basket of stocks tied to AI data center construction has already returned nearly 60% so far this year due to increased spending scale.

🔄 The valuation difference between growth and value stocks has shrunk, making growth stocks less expensive relative to value compared to before.

⚡ Snider suggests investors should focus on secular growth companies and those with unique earnings advantages tied to power infrastructure investment.

📈 Market sentiment has recovered from negative territory in late March to positive levels similar to mid-January.

📉 Only a small number of large technology companies have been responsible for the majority of recent upward revisions to index-level EPS estimates.

Bullish Signals
  • US stocks are forecast to rise 6% in 2026 with the S&P 500 expected to reach a year-end target of 7,600.
  • Earnings-per-share growth is projected at 12% for 2026 and 10% for 2027, powering stock market gains.
  • AI-related investment is estimated to drive approximately 40% of S&P 500 earnings-per-share growth this year.
  • Consensus capital expenditure estimates for the largest cloud infrastructure companies jumped by $130 billion last quarter, reaching $670 billion for 2026.
  • A Goldman Sachs Research basket of stocks tied to AI data center construction has returned nearly 60% so far this year.
  • Year-to-date share buyback authorizations have hit a record $422 billion, demonstrating strong corporate confidence in shareholder returns.
  • Announced strategic merger-and-acquisition volumes have more than doubled compared to a year ago, highlighting active dealmaking.
  • The S&P 500 has surged about 13% since March 30, marking its sharpest rally since April 2020.
  • Valuations at roughly 21 times P/E are considered close to fair value given near-record profits and low interest rates.
  • Growth stocks valuation difference has shrunk relative to value stocks, reducing overpricing concerns compared to previous periods.
Risk Factors
  • Market breadth has dropped to one of its narrowest levels since the dotcom era, indicating limited participation in the current rally.
  • The war in Iran is identified as a clear equity market risk that could trigger volatility in the coming weeks.
  • Valuations are high compared to their long-run history, with the P/E ratio higher than it has been about 87% of the time over the past 40 years.
  • AI-related uncertainty has compressed valuations across much of the market, affecting not just disrupted industries but also mega-cap technology firms.
  • Just a small number of large technology companies have driven the majority of recent upward revisions to index-level EPS estimates, creating concentration risk.
  • Until large AI infrastructure companies demonstrate accelerating revenues alongside slowing capital spending, they may lack sustainable investment appeal.
  • Last quarter, consensus capital expenditure estimates for the largest cloud infrastructure companies jumped by $130 billion, reaching $670 billion for 2026, which could strain cash flows.
Full Analysis
Goldman Sachs Research forecasts a 6% rise for US stocks over the next year, projecting the S&P 500 to reach a year-end target of 7,600 as of April 24. Ben Snider, chief US equity strategist at Goldman Sachs, attributes this outlook to strong corporate earnings growth expectations, including a projected 12% increase in earnings per share (EPS) for 2026 and another 10% rise in 2027. The index currently trades at a price-to-earnings multiple of approximately 21 times, which the firm views as reasonable given near-record profit levels and low interest rates, though valuations remain high compared to their long-term history as they are above what was seen for 87% of the past 40 years. The S&P 500 has already surged about 13% since March 30, marking its sharpest rally since April 2020 and March 2009, a pattern consistent with historical market recoveries where stocks bounce back on early signs of improvement before conditions fully stabilize. Investor sentiment has also shown significant recovery, moving from a bottom of negative 0.9 in late March to positive 0.8 by mid-April, though still below historical peaks. Retail traders are returning to the market with enthusiasm, potentially aided by the elimination of the Pattern Day Trader rule which relaxes minimum equity requirements in margin accounts. Consensus earnings estimates have risen consistently recently, driven by the S&P 500's limited sensitivity to oil prices and substantial tailwinds from spending on artificial intelligence (AI). Snider estimates that AI-related investment will account for roughly 40% of the index's EPS growth this year, fueled by large technology companies where recent upward revisions in EPS estimates are concentrated. Capital expenditure estimates for the largest cloud infrastructure providers jumped by $130 billion last quarter, reaching a total of $670 billion for 2026, which represents more than 90% of their expected cash flows this year. This spending has driven a basket of Goldman Sachs Research stocks tied to AI data center construction to return nearly 60% so far this year. However, Snider notes that the AI boom has two sides; while it boosts earnings, the uncertainty surrounding it has compressed valuations across much of the market, including mega-cap technology firms at the center of the buildout. He advises that until these large companies show accelerating revenues alongside slowing capital spending, the clearest investment opportunity remains in companies supplying the AI infrastructure itself. Despite the bullish outlook, Snider highlights reasons for caution, noting that market breadth has narrowed to one of its lowest levels since the dotcom era. He identifies the war in Iran and the ongoing AI buildout as the clearest equity market risks in coming weeks. On a positive note, corporate confidence appears solid, with year-to-date share buyback authorizations hitting a record $422 billion and announced strategic merger-and-acquisition volumes more than doubling compared to the previous year. Snider suggests investors should focus on companies benefiting from longer-term structural trends and unique earnings advantages, particularly those tied to power infrastructure investment, noting that the valuation gap between growth stocks and value stocks has recently shrunk, making growth stocks less overpriced relative to their historical norms.