Investment bank Goldman Sachs is raising its expectations for the S&P 500 index in 2024. According to a note sent to their clients last week, Goldman Sachs is now predicting the index to come at 5,600 points compared to the previous forecast of 5,200.
Goldman Sachs analysts based their prediction on the growth in earnings that the major US tech stocks showed, as well as the favorable price-to-earnings ratio.
Five of the biggest US tech stocks – Microsoft, Nvidia, Google, Amazon.com, and Meta Platforms – currently comprise 25% of the value of the S&P 500 after experiencing a collective jump of 45% so far in 2024.
“The drivers of the rally include upward revisions to consensus 2024 earnings estimates for these same tech companies and valuation expansion stemming from increased investor enthusiasm about artificial intelligence (AI),” Goldman Sachs analysts wrote in the note.
However, not everyone is happy about tech stocks driving the growth of the S&P 500. While tech companies are expected to remain strong in the foreseeable future, some analysts believe that other sectors will need to step up in order to make it sustainable.
S&P 500 closed at 5,431.60 points on Friday after a steady climb in recent weeks that was followed by new record highs. The index is up 14.40% year-to-date.