Goldman Sachs: S&P 500 Expected to Rise 11% Over the Next 12 Months

According to ChainCatcher, Goldman Sachs has raised its S&P 500 target for the second time in less than two months. In a report led by David Kostin, Goldman strategists wrote: “The Federal Reserve’s earlier and deeper-than-expected easing, bond yields coming in lower than we previously anticipated, continued strong fundamentals for large-cap stocks, and investors’ willingness to look past potential short-term earnings softness all support our decision to raise our forward P/E expectation for the S&P 500 from 20.4x to 22x. We have also raised our S&P 500 return forecasts for 3, 6, and 12 months to +3%, +6%, and +11%, respectively, with new target levels of 6,400, 6,600, and 6,900, compared to previous forecasts of 5,900, 6,100, and 6,500.”

The strategists maintain their forecast for S&P 500 earnings per share growth of 7% in both 2025 and 2026, but note that this outlook faces two-way risks. The key downside factor for EPS forecasts is the ultimate level of tariffs and their impact on corporate profits. While narrowing breadth often signals above-average downside risk, the analysts believe that ‘chasing gains’ is more likely than ‘chasing losses’ and expect the market rally to broaden in the coming months, with overweight positions in software and services, materials, utilities, media and entertainment, and real estate.