📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Goldman Sachs raises S&P 500 year-end target to 5,600

Published 06/17/2024, 01:29 AM
Updated 06/17/2024, 11:50 AM
© Reuters. FILE PHOTO: A trader looks at a screen that charts the S&P 500 on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 27, 2017. REUTERS/Brendan McDermid/File Photo
US500
-
MSFT
-
GOOGL
-
AMZN
-
NVDA
-
META
-

(Reuters) -Goldman Sachs has raised its 2024 year-end target for the S&P 500 Index to 5,600 from 5,200, citing strong earnings growth by five mega-cap U.S. tech stocks and a higher fair value price-to-earnings ratio multiple.

Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), Google (NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN), and Meta Platforms (NASDAQ:META) have collectively surged by 45% and now comprise 25% of the S&P 500 equity cap, the brokerage wrote in a note after markets closed on Friday.

"The drivers of the rally include upward revisions to consensus 2024 earnings estimates for these same tech companies, and valuation expansion stemming from increased investor enthusiasm about artificial intelligence (AI)," it added.

The upgraded target reflects an upside of about 3.1% to the index's last close of 5,431.60.

The brokerage expects roughly unchanged real yields by the year-end and strong earnings growth to support a 15x P/E for the equal-weight S&P 500 Index.

"The (U.S.) election remains a key risk to the S&P 500 level and falls between our 3-month and year-end forecast horizons," said analysts at Goldman Sachs.

The United States will hold its next presidential election in November this year.

The brokerage added that index volatility increases before the election during election years, but following the election, volatility typically subsides and the S&P 500 index rebounds to an even higher level.

© Reuters. FILE PHOTO: A trader looks at a screen that charts the S&P 500 on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 27, 2017. REUTERS/Brendan McDermid/File Photo

Meanwhile, Evercore ISI, in a note on Sunday, had raised its year-end target for the benchmark index to 6,000 from 4,750, expecting earnings to grow 8% this year on the back of strong potential from the AI "revolution".

The brokerage upgraded the information technology sector to "outperform" from "in line", saying the sector benefits from structural demographic trends and persistence of AI frenzy.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.