The benchmark index's climb toward 8,700 would represent an upside exceeding 14% from its recent level of 7,592.40 points. Valuations have already moderated to roughly 18.5 times 12-month forward earnings, down significantly from peaks exceeding 23 times. However, corporate profits face pressure as U.S. earnings growth is forecast to drop from 36% to 11% by 2027 amid reduced artificial intelligence infrastructure spending. To navigate these divergent trends, the firm maintains an overweight stance on American and Japanese shares.
Key points
Goldman Sachs expects lower bond yields and easing inflation to support positive equity r…: Goldman Sachs expects lower bond yields and easing inflation to support positive equity returns next year.
Artificial intelligence infrastructure earnings face increasing pressure as global profit…: Artificial intelligence infrastructure earnings face increasing pressure as global profit growth rates are slated to halve by 2027.
Investment recommendations favor equities in the United States and Japan over European, A…: Investment recommendations favor equities in the United States and Japan over European, Asian, and emerging markets.
Sources checked by our analysis pipeline: 1
The Wall Street brokerage's target price represents an over 14% upside to the index's last close of 7,592.40 points.
Goldman's call closely follows a massive selloff in the biggest technology companies after the Democratic win in the US midterm elections last week spurred concerns of a slowdown in data center buildout.
The brokerage expects earnings growth rates in global markets to at least halve in 2027, with the US alone likely to drop to 11% from 36%, possibly due to hyperscaler capex growth easing.
The slowdown in spending would weigh on earnings across the AI infrastructure complex, but with more attractive valuations, positive but slower economic and earnings growth as well as lower bond yields and inflation, equities will continue to rise next year, Goldman said in a note on Thursday.
Valuations remain attractive, with the S&P 500 last trading at around 18.5 times its 12-month forward earnings, well off its recent highs of over 23-times.
Within equities, Goldman maintained an "overweight" rating for the US and Japan, "neutral" for Asia and emerging markets, and "underweight" for Europe.
The early venture capital bet made on the artificial intelligence firm Anthropic highlights the massive valuation growth projected across the sector. Potential future windfalls dwarf the proceeds actually recovered after the shares were surrendered in 2024. This stark divergence illustrates how subsequent market rallies can vastly outpace the cash realized during earlier asset divestments.
The Jockey licensee approved the corporate action alongside second-quarter financial results marked by modest profit growth and ongoing input cost pressures. While the payout stands as the single highest interim distribution across the market for the period, the company's shares continue to face persistent downward pressure on the bourses. Eligible investors must hold shares by the designated cutoff next week to qualify for the disbursement.
Investors are bracing for major volatility driven by significant leadership shifts, landmark public offerings, and pivotal diplomatic engagements. Key tech earnings and high-stakes bilateral summits will test broader market stability alongside major product launches and shifting commodity supply dynamics. These coordinated milestones across North America, Europe, and Asia promise to reset sentiment across multiple core asset classes.