Eben@CANSLIM ResearchGoldman Sachs argues the S&P 500 is “over-earning” rather than trapped in an earnings bubble, forecasting EPS growth of 11% in both 2027 and 2028. The bank expects earnings growth, not multiple expansion, to drive the bull market, with a 12-month S&P 500 target of 8,700, implying roughly +14%. Three temporary boosts — AI capex, semiconductor margin expansion and private investment gains — should fade rather than reverse.
Key Takeaways
- Goldman Sachs forecasts S&P 500 EPS of $415 in 2027 (+11%) and $460 in 2028 (+11%), with a 12-month index target of 8,700 (+14%).
- The AI investment boom accounts for nearly half of S&P 500 earnings growth in 2026, but Goldman expects that tailwind to turn into a marginal drag by 2028 as depreciation mounts.
- Semiconductor gross margins near 70% — with memory names near 80% — leave S&P 500 earnings exposed; a reversion to the 15-year average of 55% would cut EPS by roughly 10%.
- Mega-cap tech booked over $150bn of “other income” from equity stakes in Q2 2026, lifting S&P 500 EPS by 12%; stripping it out would make 2027 growth look like 18%.
- The S&P 500 forward P/E has fallen from 23x to 19x in a year, matching its 10-year average, even as the cyclically-adjusted P/E sits at the 93rd percentile.
What the Goldman Sachs “Over-Earning” Report Says
In a report titled “US Equity Views: Over-earning, but not an earnings bubble”, published 17 September 2026, Goldman Sachs Portfolio Strategy analysts Ben Snider, Ryan Hammond, Daniel Chavez, Kartik Jayachandran and Christophe Sung argue that the recent surge in S&P 500 profits reflects genuine but temporary drivers rather than an unsustainable bubble. S&P 500 EPS grew 51% year-on-year in Q2 2026 and 26% over the trailing four quarters — a pace exceeded in the past 30 years only during the post-recession rebounds of 2010 and 2021.
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