Goldman Sachs and Deutsche Bank see S&P 500 rally continuing

Goldman Sachs rejected fears of an S&P 500 earnings bubble. Deutsche Bank reaffirmed its 8,000-point year-end target for the benchmark index. Goldman Sachs projects another quarter of double-digit earnings growth starting next week. Ben Snider, Goldman's chief U.S. equity strategist, said an earnings bubble would mean profits were about to pop. Goldman Sachs does not see that happening. Aggregate S&P 500 earnings are climbing more than 30% year over year. The median stock has gained 14%. Snider said some deceleration is likely as fiscal tailwinds fade and energy costs rise. He expects results to remain robust. Third-quarter GDP tracking points above 3% growth. Snider said token consumption and compute demand should continue rising through 2027. He said compute demand would sustain one of the market's key earnings tailwinds. Snider said investor positioning is at its lowest level since March. He said falling oil prices or lower rates could fuel further upside. Deutsche Bank's equity strategy team is led by Binky Chadha. The team said third-quarter earnings should deliver roughly 30% year-over-year growth. The team said second-quarter growth was equally strong. Deutsche Bank raised its 2027 earnings-per-share forecast to $420. The forecast implies growth of nearly 17%. Chadha's team said 21 of the past 23 mid-term election years produced positive fourth-quarter returns. Those returns averaged a 7% gain. The bank said positioning, technical indicators, and supply-demand dynamics remain favorable. Goldman Sachs and Deutsche Bank expect the extraordinary earnings growth seen throughout 2026 to moderate somewhat. Neither firm expects a collapse. Both firms see further S&P 500 gains if companies continue delivering double-digit or high-teens profit growth supported by AI-related investment and a resilient broader economy.