Goldman Sachs Forecasts S&P 500 Growth Amid Economic Expansion

Goldman Sachs projects the S&P 500 index to rise for the third consecutive year by 2025, driven by steady economic expansion and earnings growth. Chief U.S. Equity Strategist David Kostin anticipates the index reaching 6,500 points with a total return of 10%, and earnings growth of 11% in 2025 and 7% in 2026.

Despite high valuations posing risks, the index’s earnings per share are expected to align with consensus forecasts. The “Magnificent 7” stocks are predicted to outperform the rest of the index, albeit with a reduced margin. Trade policies and economic growth are expected to favor the broader S&P 493 index.

Goldman Sachs also forecasts increased M&A activity in 2025, with regulatory changes potentially boosting deals. AI investments are expected to shift towards application and monetization phases, offering growth opportunities for software and service companies.

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