Banking giant Goldman Sachs believes the S&P 500 will end the year on a high note, despite seeing clear market risks that could play out in the near term.
Ben Snider, chief US equity strategist in Goldman Sachs Research, says in a new report that the bank expects the S&P 500 to climb to 7,600 by the end of 2026, a 5.50% rise from current levels.
“That forecast is built on expectations of 12% earnings-per-share growth in 2026 and a 10% increase in 2027. The index is trading at a price-to-earnings (P/E) multiple of roughly 21 times—slightly below the 22 times reached in January 2026 and close to its five-year average.”
While Snider is bullish on the stock market, he names three reasons that warrant investor caution.
“Market breadth—the share of stocks participating in the rally—has dropped to one of its narrowest levels since the dotcom era…”
Snider also says hostilities in the Middle East and the massive AI buildout are the “clearest equity market risks in the coming weeks.”
Despite those overhangs, Snider says two stock groups offer the best opportunity for investors.
“Investors should focus on companies that benefit from longer-term structural trends (secular growth companies) and from unique earnings advantages (particularly those tied to power infrastructure investment)…
Growth stocks, or companies that are expected to increase their earnings quickly over time, used to be more expensive compared to slower-growing value stocks. But recently, that valuation difference has shrunk. That means growth stocks aren’t as overpriced relative to value stocks as they were before.”
As of Thursday’s close, the S&P 500 is trading at 7,209.
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