Goldman Sachs Sees S&P 500 Index Reaching 8,700 Points by Next Year

Goldman Sachs is downplaying concerns over an 'earnings bubble', arguing that corporate earnings growth will continue to drive the S&P 500 index upwards. The bank forecasts a 14% increase in the index to around 8,700 points next year, driven by an expected 11% rise in corporate earnings.

The strong earnings performance of US companies is attributed to a solid economic outlook and the artificial intelligence boom. Goldman Sachs strategists point out that while AI-related investments have boosted profits, this trend is expected to slow down by 2027.

Ben Snyder, leading the strategy team at Goldman Sachs, wrote in a report: 'Market pricing reflects expectations of sustained earnings growth, but also harbors reasonable skepticism about the sustainability of current profitability.'