Goldman Sachs has raised the year-end 2024 target for the S&P 500 index from 5200 points to 5600 points, citing strong earnings growth from the five major US tech giants and higher justified P/E ratios.
In a report released after Friday's market close, Goldman Sachs noted that the stock prices of Microsoft, Nvidia, Google, Amazon, and Meta Platforms collectively rose by 45%, now accounting for 25% of the S&P 500 index's market value.
"The drivers of this rise include upward revisions to earnings expectations for these tech companies in 2024 and valuation expansion driven by increased investor enthusiasm for artificial intelligence (AI)."
This new target reflects a potential increase of approximately 3.1% from the previous closing point of 5431.60 on the S&P 500 index.
Goldman Sachs expects real yields to remain largely unchanged by the end of the year, with strong earnings growth supporting a 15x P/E ratio for the S&P 500 equal-weighted index.
Goldman Sachs analysts noted, "The (US) election remains a key risk to the level of the S&P 500 index and between our 3-month and year-end forecasts."
The United States will hold its next presidential election in November this year.
Goldman Sachs added that in election years, index volatility increases before the election but typically subsides afterward, with the S&P 500 index rebounding to higher levels.
