Wall Street has a funny way of making 12% sound like a disappointment. If you’ve been tracking the Goldman S&P 500 forecast lately, you know the giant from 200 West Street is calling for the index to hit 7,600 by the end of 2026. After the absolute tear we saw in 2024 and 2025, a projected 12% total return feels... well, kinda quiet.
But quiet doesn’t mean boring.
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Ben Snider and the team at Goldman Sachs Research aren't just throwing darts at a board. Their 2026 outlook, titled "Tech Tonic—a Broadening Bull Market," suggests we are moving out of the "exuberance" phase and into something much more fundamental. Basically, the easy money has been made. Now, we’re looking at a market driven by cold, hard earnings rather than just "vibes" and multiple expansion.
The 7,600 Level: Breaking Down the Math
Honest talk? Markets are expensive. The S&P 500 is currently trading at a forward price-to-earnings (P/E) ratio of about 22x. That’s pushing the boundaries of what we saw during the 2021 peak and is creeping toward the "dot-com" insanity of 2000.
So, how does Goldman get to 7,600?
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It’s all about the EPS—earnings per share. Goldman expects S&P 500 earnings to grow by 12% in 2026. They’re betting that a "sturdy" US economy, which they forecast to grow at 2.7%, will provide enough of a tailwind to keep the engines humming. They aren't expecting the P/E multiple to grow much more. In their base case, valuations stay flat. You get your returns from the companies actually making more money, not from people being willing to pay more for the same dollar of profit.
Why 2026 Is Different
- The Fed is playing ball: Goldman anticipates at least two more 25-basis-point rate cuts in early 2026.
- AI is moving from "Hype" to "Help": We’re entering a phase where companies are actually using AI to cut costs, not just buying H100 chips to look cool.
- GDP is outperforming: While many expected a slowdown, the US is projected to outpace the rest of the world.
The "Magnificent 7" Aren't Carrying the Whole Bag Anymore
For the last two years, it felt like if NVIDIA sneezed, the whole market caught a cold. Goldman’s data shows that in 2025, the top tech stocks accounted for a massive 53% of the total market return.
That concentration is, frankly, terrifying for some.
But 2026 looks to be the year of the "Broadening Bull." The gap between the "Mag 7" and the "S&P 493" is narrowing. While Goldman expects heavyweights like Microsoft, Amazon, and Meta to contribute about 46% of earnings growth, they also see a massive rotation into cyclical sectors.
Think mid-income consumers. Think non-residential construction.
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David Kostin, before his retirement this year, noted that as the Fed eases and the economy stays "sturdy," the rest of the market finally has room to breathe. This is a huge shift. If you’ve been "all-in" on tech, the Goldman S&P 500 forecast suggests it might be time to look at the boring stuff again.
The Real Risks Nobody Wants to Talk About
It isn't all sunshine and 12% returns. Goldman is very clear that high valuations leave a "minimal margin for error." If earnings miss by even a little bit, that 22x multiple can contract fast.
A 10% correction is always a heartbeat away when things are priced for perfection.
Then there's the labor market. Goldman strategists Jennifer Guenther and John Tousley have pointed out that while they expect a "cyclical acceleration," any sharper-than-expected uptick in unemployment could derail the whole thesis. We're walking a tightrope.
Strategy: How to Trade the Goldman S&P 500 Forecast
So, what do you actually do with this information?
First, stop chasing the 20% annual gains we saw in the mid-2020s. That’s a recipe for disappointment. Goldman’s Peter Oppenheimer suggests a 10-year annualized return of about 6.5%. That’s a far cry from the double-digit dreams of recent years.
- Focus on Quality: Look for firms with strong free cash flow. In a world where "everything is expensive," the companies that actually return cash to shareholders are king.
- Watch the "Physical AI" Space: Goldman is betting on the interaction of AI with the physical world—robotics and automation. This is where the next leg of productivity comes from.
- The Re-leveraging Play: Corporate leverage is low but starting to rise. This creates a sweet spot for alternative asset managers and private equity, which Goldman expects to have a "dealmaking comeback" in 2026.
- Value is Back: Following a strong 2025, the "Value" factor still looks attractive because the valuation spreads are still wide compared to historical norms.
The Bottom Line on 7,600
The Goldman S&P 500 forecast isn't a guarantee, but it’s a roadmap for a "normalizing" market. We’re moving away from the era of "free money" and "infinite growth" and back to a market where earnings matter most.
Expect volatility. Expect some "hot" days where valuations feel stretched. But as long as the US consumer stays employed and AI continues to drive efficiency, the path of least resistance for the S&P 500 still looks to be up.
Next Steps for Investors:
- Rebalance your portfolio to ensure you aren't over-weighted in the top 5 tech stocks.
- Review your 2026 cash needs; if the market hit Goldman's 7,600 target today, would you have the discipline to take some chips off the table?
- Assess your "Value" exposure; look into Russell 2000 or equal-weight S&P 500 ETFs to capture the broadening rally Goldman expects.