The U.S. stock market still has room for upward movement, and driven by continued corporate earnings growth and moderate economic expansion, the S&P 500 index is expected to rise to 7,600 points.
Goldman Sachs strategists pointed out that the U.S. stock market still has room for upward movement. By the end of 2026, driven by sustained corporate earnings growth and moderate economic expansion, the S&P 500 index is expected to climb to 7,600 points. This forecast is based on an in-depth analysis of the earnings outlook for constituent companies—further calculations show that earnings per share (EPS) of S&P 500 constituents will increase to approximately $309 in 2026 and further rise to about $342 in 2027, corresponding to annual growth rates of approximately 12% and 10%, respectively.
According to Goldman Sachs’ latest ‘U.S. Weekly Kickstart’ portfolio strategy report, the aforementioned earnings growth will support the corresponding price target, implying a potential return of approximately 14% from current levels. This outlook reflects that even with interest rates remaining high and financial conditions tightening slightly, the market still believes in the continued expansion of corporate profitability.
Technology will continue to drive earnings growth
Technology companies remain the core engine of earnings growth in the U.S. stock market. Goldman Sachs’ latest analysis shows that the information technology sector will contribute the largest increment to S&P 500 index profits in the coming years—the sector’s earnings per share are expected to jump from approximately $70 in 2025 to $92 in 2026 and further rise to $109 in 2027.
Other key sectors will also contribute significant increments, including financials, healthcare, and communication services. However, compared to the technology sector, the earnings growth rates in these industries are expected to be more moderate.
Overall, the bank’s strategists expect the S&P 500 index to grow at an earnings rate of approximately 12% in 2026 and about 10% in 2027, consistent with the long-term expansion trend of U.S. corporate profits.
Valuations remain relatively high but have not reached extreme levels
Despite the sustained strong rally of the S&P 500 index in recent years, Goldman Sachs still assesses its valuation level to be within a historically reasonable range. The current forward price-to-earnings ratio of the index is approximately 21 times, close to its long-term average relative to the historical distribution.
The divergence in sector valuations is particularly pronounced: valuations for industrials, utilities, and consumer staples sectors are near the upper limits of their respective historical ranges, while valuation multiples for the financials sector remain relatively low historically.
This divergence in valuation structure suggests that as growth expectations undergo dynamic adjustments, investors may accelerate sector rotation to reallocate their portfolios.
Market leadership remains highly concentrated.
The report further highlights the increasingly pronounced concentration characteristics of the U.S. equity market. According to Goldman Sachs estimates, $S&P 500 Index (.SPX.US)$ the top ten constituents now account for 39% of total market capitalization and approximately 31% of earnings.
This concentration essentially reflects the dominance of a few technology-driven companies — firms that are profoundly benefiting from the ongoing empowerment of long-term structural trends such as artificial intelligence, cloud computing, and digital infrastructure.
Meanwhile, Goldman Sachs strategists have particularly emphasized that the current market breadth (i.e., the scope of stocks participating in the rally) remains relatively narrow, indicating that only a limited number of individual stocks are truly driving overall index gains.
Energy leads asset returns year-to-date
Year-to-date, energy-related investments have outperformed across all asset classes. Crude oil prices have surged by approximately 70%, while the energy sector as a whole has risen nearly 30%. This performance not only surpasses broader equity market benchmarks but also significantly outpaces other major asset categories.
At the same time, gold and consumer staples sectors have also demonstrated robust upward momentum, emerging as bright spots in the market. By contrast, growth-oriented sectors such as technology and discretionary consumer goods have lagged behind on a risk-adjusted basis.
Economic growth is expected to remain stable.
Economists at Goldman Sachs predict that the U.S. economy will continue on a path of moderate expansion in the coming years. According to their latest forecasts, real GDP growth is projected to be approximately 2.3% in 2026, slowing to around 2.0% in 2027—a trajectory largely consistent with market consensus. Regarding interest rates, Goldman Sachs expects the yield on the 10-year U.S. Treasury bond to decline modestly over the next year, reaching about 4.1%.
Overall, this combination of economic and financial conditions holds the potential to support continued stock market gains. Although investors remain sensitive to inflation trends and shifts in monetary policy, the dual factors of moderate economic growth and gradually easing interest rate pressures may provide strong support—bolstering corporate earnings growth while enhancing the attractiveness of equity valuations.
Editor/Rocky
