Momentum tech stocks tied to the AI boom may be triggering market tremors, but Goldman Sachs still thinks the year will end just fine for investors.
In a new note, Goldman Sachs strategist Ben Snider maintained his 8,000 year-end S&P 500 (^GSPC) price target. His target assumes about 5% upside from the current level of 7,659.
If Snider was concerned about an AI bubble bursting — as investors on X are chatting about seemingly around the clock — he isn’t showing it in his 2027 S&P 500 target either. He sees the S&P 500 wrapping up next year at 8,700.
“Positive but decelerating growth has historically been associated with positive but moderating S&P 500 returns. Equity returns in these environments have historically been driven by earnings growth rather than by valuation expansion,” Snider said.
Snider is modeling for 36% earnings growth for the S&P 500 this year, cooling to an 11% increase in 2027.
7,712.69 +53.25 (+0.70%)
As of 10:22:46 AM EDT. Market Open.
Snider’s defense of a solidly bullish outlook comes as the very driver of markets this year — tech stocks playing a key role in the AI boom — fall under increased scrutiny by investors.
The returning concern: Revenue may not match the billions of dollars companies are investing in AI. How that unfolds for companies using massive amounts of debt to fund their AI investments is a top worry right now.
AI chip darling Nvidia (NVDA) shed more than $350 billion in market value last week. The Philadelphia Semiconductor Index (SOXX) plunged more than 11%.
Neocloud CoreWeave (CRWV) shed 25% on the week amid rising borrowing costs.
“This [move in CRWV] is more sentiment-driven. This is not about fundamentals,” BofA analyst Tal Liani said on Sozzi Unleashed. “This is not about them not being able to pay for the debt, et cetera. This is more sentiment-driven, and the sentiment needs to change. And what’s going to happen is, as always, there’s going to be a period of concern. And then the fundamentals will kick in, meaning revenues, revenue growth.”
Brian Sozzi is Yahoo Finance’s Executive Editor, host of the Sozzi Unleashed morning show and the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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