Bullish Banks: Goldman and Deutsche Refuse to Back Down on S&P 500

Goldman Sachs and Deutsche Bank are reaffirming their bullish outlook on the S&P 500, dismissing concerns of an earnings bubble. Goldman's chief U.S. equity strategist, Ben Snider, said a bubble implies earnings are about to collapse, but that doesn't fit today's market.

The median stock is still posting a solid 14% gain year over year, and aggregate S&P 500 earnings are climbing more than 30%. Some deceleration looks likely as fiscal tailwinds fade and energy costs rise, Snider acknowledged, but he expects results to remain robust.

On artificial intelligence specifically, Snider said token consumption and compute demand should continue to rise through 2027, sustaining one of the market's key earnings tailwinds. Investor positioning currently sits at its lowest level since March, a sign of widespread caution that could fuel further upside if catalysts such as falling oil prices or lower rates materialize.

Deutsche Bank also echoed Goldman Sachs' confidence, reaffirming its year-end target of 8,000 points for the benchmark index. The bank's equity strategy team highlighted several factors supporting their optimistic stance, including 21 of the past 23 mid-term election years producing positive fourth-quarter returns, averaging a 7% gain.