As the new year approaches, optimism surrounds the stock market, driven largely by advancements in artificial intelligence (AI). Goldman Sachs’ Chief U.S. Equity Strategist, Ben Snider, asserts a strong outlook for the S&P 500, projecting a target of 7,600 for 2026—slightly more than 10% above the recent closing figures. This anticipated growth is largely attributed to the increasing productivity driven by AI technologies.
Snider expressed that while AI adoption is still in its early stages, larger companies are making more significant progress compared to their smaller counterparts. He forecasts that S&P 500 earnings per share will rise by 12% in 2026, reaching about $305. Significantly, he noted that six major tech companies—Nvidia, Apple, Microsoft, Alphabet, Broadcom, and Meta Platforms—are expected to contribute to nearly half of the overall growth in earnings per share for the index.
The upward trajectory of the S&P 500 has already been significant, with the index achieving its all-time closing high at 6,901, marking a 17.3% increase year-to-date. The technology sector, which commands the largest share in market capitalization, has surged by 26% this year.
Additionally, Snider highlighted that companies outside of the Big Tech realm are also poised for growth. He anticipates that macroeconomic factors, including accelerating economic growth and diminishing tariff impacts on margins, will catalyze an increase in the earnings growth rate for the remaining 493 stocks in the S&P 500, rising from 7% in 2025 to 9% in 2026.
The optimistic outlook isn’t exclusive to Goldman Sachs. Other strategists are also projecting significant gains for the index; for instance, Fundstrat’s Tom Lee has set his 2026 target at 7,700, while John Stoltzfus of Oppenheimer predicts an astonishing 8,100.
However, challenges could emerge as well. Recent actions by the Federal Reserve to cut its overnight rate have initiated speculation about a gradual easing in policy going forward. Snider cautioned that profit margins will be a pivotal point of focus in 2026. He noted the ongoing debate regarding the sustainability of high profit margins among major U.S. firms and indicated that competition in the AI sector will only amplify this discussion. His macro margin model suggests that while expansions are expected, they will be more modest for the average S&P 500 stock next year.
As market dynamics unfold, the interplay between technological advancements and macroeconomic conditions promises to shape the financial landscape in the months ahead.
