Despite AI bubble fears: Goldman Sachs predicts 5% rise on Wall Street by year-end

Goldman Sachs maintains its forecast that the S&P 500 index will end 2026 at 8,000 points, a 5% increase, despite concerns over an AI bubble. Strategist Ben Snider predicts the index will reach 8,700 points by 2027, driven by earnings growth. Declines in Nvidia and CoreWeave stocks are attributed to negative sentiment.

Goldman Sachs maintains an optimistic outlook for the US stock market, despite growing concerns over an artificial intelligence bubble and turmoil in technology stocks. In a new document, the bank's market strategist, Ben Snider, kept his forecast that the S&P 500 index will end the year at 8,000 points - an increase of about 5% from its current level of 7,659 points. The forecast for next year remains even more optimistic: Snider predicts the index will end 2027 at 8,700 points. Snider explains that positive but slowing growth has historically been associated with positive but more moderate returns, and that returns were driven by earnings growth rather than valuation multiple expansion. He estimates that company earnings in the index will grow by 36% this year, but the growth rate will moderate to 11% in 2027. The forecast comes amid sharp declines in leading technology stocks: Nvidia lost more than $350 billion in market value last week, the Philadelphia Semiconductor Index fell more than 11%, and cloud infrastructure company CoreWeave lost 25% of its value amid rising credit costs. Tal Liani, an analyst at Bank of America, said the decline in CoreWeave's stock is due to negative sentiment rather than the company's business data.