Goldman Sachs set a 12-month S&P 500 target of 8,700 while favoring U.S. and Japanese stocks for 2027, a view that matters to American investors as the bank sees S&P 500 earnings-per-share growth slowing.
Goldman says the target implies a 14% gain over 12 months. It sees S&P 500 earnings per share rising 11% in 2027, following 36% growth in 2026. Its forecast for the Stoxx Europe 600 index is 7% growth in 2027, versus 18% in 2026, and the bank gives European shares a below-benchmark weight in its 2027 allocation.
With index-wide growth expected to slow, Goldman puts more weight on firms able to expand earnings faster than the market. The bank expects investors to assign those companies a valuation premium. It also favors industries it believes would benefit if bond yields, inflation and oil prices declined.
Goldman has attributed close to half of the S&P 500's 2026 earnings-per-share growth to artificial intelligence (AI) investment, and expects that contribution to fade. EconoTimes discussed the estimate in an earlier report. Questions surrounding AI infrastructure spending have also pressured technology stocks. The Nasdaq 100 remains about 9% below the high it reached in early October; by contrast, the S&P 500 has advanced 11% since the start of 2026. These readings use different baselines: the Nasdaq figure is measured from an October peak, while the S&P figure tracks the index's move since the start of 2026. That leaves the broad index up for the year despite the technology-heavy benchmark's retreat from its high.
Valuations at major cloud providers are below their historical ranges, and leading firms are reporting negative cash flow. Goldman nevertheless describes the group as financially resilient, citing broadly healthy balance-sheet measures, including net debt relative to shareholder equity.
Europe's Stoxx Europe 600 set a fresh record this week while companies reported results and some investors moved out of AI shares. Goldman keeps the region below benchmark, citing less valuation compression than in other markets, government debt concerns and an active political calendar. For U.S. investors, the outlook combines a higher index target with slower earnings-growth projections and a preference for U.S. and Japanese shares.
