Key Takeaways:
- Goldman Sachs raised its S&P 500 target, rejecting comparisons to past bubble eras
- Brian Garrett flagged retail, discretionary and travel stocks for a potential squeeze
- The firm lifted its 2026 capex growth forecast to 7.8% from 6.5%
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Goldman Sachs lifts S&P 500 target, flags 3 sectors for potential squeeze
Goldman Sachs Group Inc. raised its S&P 500 target, arguing that current speculative activity does not resemble past bubble eras that preceded major market pullbacks.
"The moves (while decent) are confirmatory of what many had previously assessed, 'the market has already been looking through the conflict,'" Brian Garrett, managing director of cross asset sales at Goldman Sachs, said in a note.
The S&P 500 and the Nasdaq Composite both closed at fresh records on Monday, extending a rally that has pushed the benchmark index up more than 10 percent year to date. The Dow Jones Industrial Average ended the session lower. Goldman's updated forecast implies full-year 2026 GDP growth of 2.1 percent, according to a separate note from analyst Elsie Peng, who also raised the firm's full-year capital expenditure growth forecast to 7.8 percent from 6.5 percent.
The call comes as investors weigh whether elevated valuations and concentrated positioning in technology stocks signal an overheated market. Garrett pushed back on that view, saying speculative fervor has not reached levels that historically preceded sharp downturns. He identified retail, discretionary, and travel stocks as sectors that could see a squeeze if a US-Iran peace deal is concluded, noting those groups have "traded significantly lower since the conflict began."
Goldman estimates that AI will boost true capex growth by 3.3 percentage points in 2026, as companies accelerate infrastructure buildout and enterprise AI adoption drives software and research spending. The One Big Beautiful Bill Act's tax incentives are expected to contribute a further roughly 3 percentage points to capex growth, while the drag from higher tariffs should diminish to 0.7 percentage points from 1.5 percentage points in 2025.
The target hike positions Goldman among the more bullish forecasters on Wall Street as the S&P 500 continues to grind higher despite elevated interest rates and geopolitical uncertainty. Investors will watch upcoming economic data and any progress on the Iran negotiations for the next directional catalyst.
This article is for informational purposes only and does not constitute investment advice.
[1] Goldman Sachs hikes S&P 500 target and rejects bubble-era comparisons[2] Goldman Sachs warns AI could wipe out telephone operators, billing clerks and proofreaders first[3] Higher oil prices not expected to derail capex growth, Goldman says[4] Goldman Analysts Say UK Homebuilder Selloff Has Gone Too Far[5] Sour sentiment supports the bull market, according to Goldman Sachs
