Goldman Sachs Group Inc. has decided to stand by its year-end forecast of a 5,200 close for the S&P 500 while also leaving room for tech stocks to drive further growth that could lead to a further 15% rise. The decision to stick to the firm’s existing projection is due to the economic trajectory exhibited by incoming data as well as the Federal Reserve’s expected monetary policy direction.
The firm’s team of strategists, led by David Kostin, expect the valuations of megacap tech companies to continue their expansion, thereby potentially sending the index to 6,000 by year-end, reaching a forward price-to-earnings ratio of 23.
“Although AI optimism appears high, long-term growth expectations and valuations for the largest TMT stocks are still far from ‘bubble’ territory,” the team of strategists observed in a note to investors. Closing at 5,234.18 on Friday, the S&P 500 is up by almost 10% this year.