Goldman Sachs sets the tone for the US stock market: Profit expansion supports upward space, the S&P 500 index is expected to surpass 7600 points by the end of this year.

Goldman Sachs strategist pointed out that there is still room for the U.S. stock market to rise, and it is expected that by the end of 2026, driven by continued corporate profit expansion and moderate economic growth, the S&P 500 index is expected to climb to 7600 points. This forecast is based on a deep analysis of the earnings prospects of constituent stocks - the bank further calculates that the earnings per share of S&P 500 constituent stocks will increase to around $309 by 2026, further climbing to around $342 by 2027, with corresponding annual growth rates of approximately 12% and 10%, respectively. According to Goldman Sachs' latest "U.S. Weekly Kickstart" portfolio strategy report, this earnings growth will support the corresponding price targets, with a potential return rate of about 14% from current levels. This outlook reflects the market's confidence that corporate earnings will continue to expand, even as interest rates remain high and financial conditions tighten slightly. Technology will continue to drive earnings growth Technology companies remain the core engine of profit growth in the U.S. stock market. Goldman Sachs' latest analysis shows that the information technology industry is expected to contribute the largest increment to the profits of the S&P 500 index in the coming years - earnings per share for this industry are expected to jump from around $70 in 2025 to around $92 in 2026, further rising to around $109 in 2027. Other key industries will also contribute significantly to the earnings growth, including the financial, healthcare, and communication services sectors. However, compared to the technology sector, the earnings growth of these industries is expected to be more moderate. Overall, the bank's strategists expect the earnings growth rate of the S&P 500 index to be around 12% in 2026 and around 10% in 2027, consistent with the long-term trend of U.S. corporate profit expansion. Valuations are still high, but not at extreme levels Despite the strong upward trend of the S&P 500 index in recent years, Goldman Sachs believes that its valuation levels are within a historically reasonable range. The index's forward price-to-earnings ratio is currently around 21 times, which is close to its long-term average relative to historical distribution. Industry valuation differentiation is particularly prominent: the valuations of the industrial, utility, and consumer staples sectors have reached the upper limits of their historical ranges, while the valuations multiples of the financial sector are relatively low compared to historical levels. This difference in valuation patterns suggests that as economic growth expectations adjust dynamically, investors may accelerate the rotation of positions between different industries. Market leadership remains concentrated The report further reveals the increasing concentration of the U.S. stock market. According to Goldman Sachs estimates, the top ten companies in the S&P 500 index account for 39% of the total market value and about 31% of the total earnings. This concentration pattern essentially reflects the dominant position of a few technology-driven companies - these companies are deeply benefiting from long-term structural trends such as artificial intelligence, cloud computing, and digital infrastructure. At the same time, the Goldman Sachs strategy team emphasizes that the market breadth (the coverage range of rising stocks) is still relatively narrow, meaning that the number of stocks driving the overall index rise is limited. Energy leads asset returns this year So far this year, investments related to energy have been the standout performer among various asset classes. Crude oil prices have soared by about 70%, and energy stocks have risen by nearly 30%, outperforming not only broader stock market benchmark indices but also significantly outperforming other major asset categories. Meanwhile, gold and consumer staples sectors have also shown strong upward momentum, becoming bright spots in the market. In contrast, growth stocks such as technology and non-essential consumer goods have lagged behind in performance after adjusting for risk. Stable economic growth is expected to continue Goldman Sachs economists predict that the U.S. economy will continue to expand moderately in the coming years. The latest forecasts from the institution show that real GDP growth is expected to be around 2.3% in 2026, slowing to around 2.0% in 2027, a path that is broadly consistent with market expectations. In terms of interest rates, Goldman Sachs expects the yield on 10-year U.S. Treasury bonds to gradually decline to around 4.1% over the next year. Overall, this combination of economic and financial conditions has the potential to support continued stock market gains. Despite investors remaining sensitive to inflation trends and shifts in monetary policy, moderate economic fundamentals and gradually easing interest rate pressures may provide a dual support - the former providing a foundation for corporate profit expansion, and the latter helping to enhance the attractiveness of stock valuations.