Goldman Sachs sees earnings growth driving S&P 500 higher despite record US issuance

GS expects US equities to grind higher despite a bumpy path, forecasting the S&P 500 to rise 8% by year-end as earnings growth continues to support the market.
Goldman says record US issuance should not derail the bull market in 2026, arguing IPO activity is not extreme, supply remains modest and gross buybacks should outweigh issuance.
It recommends focusing on earnings strength while reducing volatility, including exposure to AI infrastructure companies and stocks with earnings tailwinds that have low correlation to the AI trade.
Goldman notes corporate commentary which points to still-nascent enterprise AI adoption, with only 11% of companies quantifying productivity gains from specific AI use cases; the bank believes that hyperscaler capex estimates are too conservative, suggesting incremental AI investment at 2-3% of GDP (similar to the build-out of railroads and autos) could imply roughly 45% hyperscaler capex growth (vs exp. 22% in 2027). GS says that the medium-term focus for investors should be balancing stronger-than-expected capex vs the risk of a spending slowdown and uncertainty over future earnings power.