Goldman Sachs Sees Earnings Growth Slowing by 2027
Goldman Sachs' recent report on earnings growth has revealed some interesting insights into the current market trends. According to the report, S&P 500 earnings per share rose by a significant 51% year-over-year in the second quarter and 26% over the past four quarters.
This growth is attributed to three temporary factors: AI-related capital expenditures, which accounted for nearly half of this year's earnings growth; semiconductor profit margins at multi-decade highs; and equity investment gains from large tech companies, which boosted reported profits. However, Goldman Sachs analyst Ben Snider noted that these factors are expected to weaken next year.
The bank forecasts a slowdown in earnings growth, with EPS growth of 11% in both 2027 and 2028, reaching $415 and $460, respectively. This is close to the bottom-up market consensus of $419 and above the median top-down strategist forecast of $403.