Don’t sweat the war. The main event for markets remains on track to deliver.
That’s the message from Goldman Sachs, which is calling for an earnings-fueled rally to lift the S&P 500 to 8,000 by year end.
The Wall Street bank lifted its price target for the S&P 500 from its prior year-end target of 7,600. The increase implies a 6% jump for the benchmark index from current levels, and will largely be fueled by earnings gains, the bank said, pointing to “exceptionally strong” first-quarter results.
“Earnings growth has powered the entire S&P 500 return so far this year, and we expect this dynamic will continue in the coming months,” a team led by Ben Snider, the chief US equity strategist at the bank, wrote on Tuesday.
It’s been a volatile, but still mostly strong year for the S&P 500, which is up 9% year to date.
The index, which just capped off its longest weekly winning streak since 2023, posted a blended earnings growth rate of 28.4% in the first quarter, the highest earnings growth in about five years.
As of last week, 84% of firms that have reported first-quarter earnings have beat on earnings, while 81% beat revenue expectations, according to data from FactSet.
Goldman said it expected earnings per share in the index to grow 24% in 2026. About half of that growth will be attributed to the “beneficiaries” of the AI infrastructure boom, strategists estimated.
Over the last two years, near-term earnings growth has accounted for around 40% of the total increase in the S&P 500, the bank estimated, adding that the strongest stocks in the market this year have generally had the strongest earnings revisions.
“The conditions that have marked the ends of high-valuation, high-concentration bull markets in the past remain mostly absent today,” the note added.
Wall Street has stayed cautiously optimistic on the outlook for stocks this year, with the major indexes ripping higher despite the ongoing war in Iran. Investors remain largely optimistic that the war will soon come to an end, and have redirected their focus toward the AI boom and a red-hot rally in the semiconductor sector.
Despite overall optimism for stocks, Goldman flagged several signs that could suggest the market could be headed for “moderating” returns in the coming months. Strategists pointed to the recent gains in the momentum rally, as well as the market being historically weaker heading into the midterm elections.
