Goldman Sachs Forecasts 2% Rise in S&P 500 by Year-End, 6% by Mid-2026

Goldman Sachs forecasts a positive outlook for US stocks through 2026, with the S&P 500 expected to rise by 2% through year-end and 6% through mid-2026. Strategists expect the economy to move through the worst of the pandemic and inflation to decline, leading to a rebound in corporate earnings and stock market performance.

Goldman Sachs strategists have issued a positive outlook for US stocks, predicting the S&P 500 to rise by 2% through year-end and by 6% through mid-2026. The forecast is based on expectations that the economy will move through the worst of the pandemic and inflation will decline, leading to a rebound in corporate earnings and stock market performance [2].

The report from Goldman Sachs strategists, led by David J. Kostin, suggests that the economic recovery, coupled with a reduction in inflation, will drive corporate earnings growth. This growth is expected to support the stock market, particularly the S&P 500, which is anticipated to see a significant increase in valuation over the forecast period [2].

Despite the positive outlook, Goldman Sachs has also warned about potential risks, particularly a slowdown in AI investment by major tech companies. The firm's research indicates that a significant reduction in capital expenditures (capex) by hyperscaler companies could cut the S&P 500’s valuation multiple by up to 20%. However, current valuations are below previous bubbles, and the risk depends on the spending trends of these companies [1].

Goldman Sachs analysts expect a deceleration in AI spending in late 2025 or 2026, but they note that hyperscaler companies have been revising their capex guidance upward, suggesting that the slowdown may not happen as soon as expected. The current AI stock performance, with a 32% gain in 2024 and a 17% year-to-date increase, indicates investor optimism, but the valuations remain below historical bubble levels [1].

Overall, the Goldman Sachs forecast provides a cautiously optimistic view of the US stock market, with the S&P 500 expected to benefit from a recovering economy and improving corporate earnings. However, investors should remain vigilant about potential risks, such as a slowdown in AI investment by major tech companies.

References:
[1] https://fortune.com/2025/09/05/ai-inevitable-slowdown-sp-500-goldman-sachs/
[2] https://seekingalpha.com/news/4493119-goldman-sachs-forecasts-positive-outlook-for-u-s-stocks-through-2026