U.S. investment bank Goldman Sachs (GS) has raised its target for the S&P 500, saying it now expects the benchmark index to reach the historic level of 6,000 by year’s end.
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It was the third time this year that analysts at Goldman Sachs, led by David Kostin, have raised their year-end target on the S&P 500. The bank previously had a target of 5,600 on the S&P 500 and didn’t expect the index to reach 6,000 for another 12 months.
Goldman Sachs cited stronger-than-expected earnings as the main reason for its latest upgrade. The analysts say they expect $268 of S&P 500 earnings per share (EPS) in 2025, and $288 EPS in 2026. They are also bullish on margin expansion among publicly traded companies and expect profit margins to rise to 12.3% in 2025 from 11.5% this year.
A Return of the AI Rally
The analysts at Goldman Sachs also remain bullish on U.S. equities because they expect a recovery in the semiconductor trade that has slumped since July of this year. Kostin and his team also said that they see mega-cap technology stocks rallying in coming months, spurred by demand for artificial intelligence (AI).
In a note to clients, Goldman Sachs wrote: “While the magnitude of beats may moderate, strong ongoing AI demand should benefit these stocks,” referring to mega-cap technology names such as Nvidia (NVDA) and Microsoft (MSFT).
Goldman Sachs’ own stock has gained 63% over the last year. The S&P 500 index is up 21% year-to-date and currently trading at 5,735.69.
Is GS Stock a Buy?
Goldman Sachs’ stock has a consensus Strong Buy rating among 17 Wall Street analysts. That rating is based on 13 Buy and four Hold ratings issued in the last three months. There are no Sell ratings on the stock. The average GS price target of $530.67 implies 7.01% upside potential from current levels.
