Just days ahead of potentially pivotal results from Nvidia Corp., Goldman Sachs has lifted its year-end S&P 500 target to 5,200, but with much of that hinging on Big Tech’s ability to keep delivering strong profits. “Our upgraded 2024 EPS forecast of $241 (8% growth) stands above the median top-down strategist forecast of $235 (6% growth) and reflects our expectation for stronger economic growth and higher profits for the Information Technology and Communication Services sectors, which contain 5 of the ‘Magnificent 7’ stocks,” said a team led by David Kostin, chief U.S. equity strategist, in a note late Friday.
With its new target, Goldman falls in step with some of Wall Street’s most bullish forecasters — Oppenheimer’s John Stoltzfus and Fundstrat’s Tom Lee who also see a 5,200 finish after each accurately called 2023’s rally. Ed Yardeni of Yardeni Research is at the top, with a target of 5,400. It marks the second time Goldman has lifted its S&P 500 target, after a bump to 5,100 from 4,700 in late December. Earlier this year, RBC Capital boosted its S&P 500 forecast to 5,150 from 5,000 and UBS raised its own target to 5,150 from 4,850. Behind that new forecast is a more bullish economic outlook — Goldman’s economists recently lifted their 4Q/4Q 2024 real U.S. GDP growth forecast to 2.4% due to stronger consumer spending and residential investment. That’s as they expect an S&P 500 forward price/earnings multiple of 19.5 times, slightly below the current 20 times. “The nearly-completed 4Q earnings season highlighted the ability of corporates to sustain profit margins despite slowing inflation,” said Kostin and his team. But the bank’s rosier outlook hinges on the ability of Big Tech to keep performing. Kostin and his team noted how the fourth quarter had “highlighted the ongoing fundamental strength” of the Magnificent 7 stocks — Meta Platforms
META,
-2.21%,
Microsoft
MSFT,
-0.61%,
Apple
AAPL,
…
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With its new target, Goldman falls in step with some of Wall Street’s most bullish forecasters — Oppenheimer’s John Stoltzfus and Fundstrat’s Tom Lee who also see a 5,200 finish after each accurately called 2023’s rally. Ed Yardeni of Yardeni Research is at the top, with a target of 5,400. It marks the second time Goldman has lifted its S&P 500 target, after a bump to 5,100 from 4,700 in late December. Earlier this year, RBC Capital boosted its S&P 500 forecast to 5,150 from 5,000 and UBS raised its own target to 5,150 from 4,850. Behind that new forecast is a more bullish economic outlook — Goldman’s economists recently lifted their 4Q/4Q 2024 real U.S. GDP growth forecast to 2.4% due to stronger consumer spending and residential investment. That’s as they expect an S&P 500 forward price/earnings multiple of 19.5 times, slightly below the current 20 times. “The nearly-completed 4Q earnings season highlighted the ability of corporates to sustain profit margins despite slowing inflation,” said Kostin and his team. But the bank’s rosier outlook hinges on the ability of Big Tech to keep performing. Kostin and his team noted how the fourth quarter had “highlighted the ongoing fundamental strength” of the Magnificent 7 stocks — Meta Platforms
META,
-2.21%,
Microsoft
MSFT,
-0.61%,
Apple
AAPL,
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