Goldman Sachs Projects S&P 500 Hits 7,600 on AI Boom

Goldman Projects 12% Earnings Growth Driving S&P 500 to 7,600

Goldman Sachs projects the S&P 500 could reach 7,600 by the end of 2026, reaffirming a bullish outlook for U.S. stocks based on strong corporate earnings. In interviews on March 10 and 16, chief U.S. equity strategist Ben Snider confirmed the firm's forecast for 12% earnings growth for the index in 2026. This growth is expected to be the market's primary driver, rather than multiple expansion. The S&P 500's forward price/earnings multiple has already contracted from 22 to approximately 20 times consensus estimates, a level Goldman Sachs considers reasonable given low interest rates and high corporate profitability.

AI Investment Boom Fuels 40% of S&P 500 EPS Growth

The artificial intelligence boom is the primary engine behind the optimistic earnings forecast, projected to contribute 40% of the S&P 500's earnings-per-share growth this year. This surge is fueled by massive capital expenditure from hyperscalers like Amazon Web Services, which are expected to spend a combined $670 billion in 2026. This spending directly translates into revenue for companies in the AI infrastructure and semiconductor sectors. Snider notes that the market is still in the early stages of the AI cycle, with 70% of S&P 500 companies mentioning AI on earnings calls but only 1% quantifying its direct earnings impact.

I want to see evidence that all of this AI investment is going to turn into AI revenue and earnings. That, to me, is the biggest current question for U.S. equity investors.

— Ben Snider, Chief U.S. Equity Strategist at Goldman Sachs

Geopolitical Conflict Poses 19% Downside Risk

Despite the positive forecast, Goldman Sachs warns of significant macroeconomic risks. A severe disruption to oil supplies resulting from the Middle East conflict could trigger a nearly 19% decline in the S&P 500. This heightened uncertainty presents a key risk to equity valuations and economic activity. To navigate this landscape, Snider identified sectors with strong, non-cyclical growth prospects. He highlighted solar energy, which benefits from rising power demand from AI and higher oil prices, and cybersecurity, which shows resilient earnings growth even as the broader software industry has weakened.