Goldman Sachs: S&P 500 earnings up 26%, but not a bubble

According to Chaowang Research, Goldman Sachs' September 17, 2026 research report indicated that the S&P 500's second-quarter earnings per share grew 51% year over year, up 26% over the preceding four quarters. Goldman Sachs views the earnings surge as exceptional but not reflective of a bubble. Under the base-case scenario, the projected slowdown will not result in a collapse, with EPS growth forecast at 11% for both 2027 and 2028, reaching $415 and $460 respectively, supported by a 12-month price target of 8,700 points. AI capital expenditure accounted for nearly half of this year's earnings growth, but its contribution is expected to taper from 11 percentage points in 2026 to 7 percentage points in 2027, before turning negative at -1 percentage point in 2028. Goldman Sachs identifies AI capex, semiconductor margin expansion, and equity investment gains as three temporary tailwinds, all of which are projected to diminish next year. Should semiconductor gross margins retract from 70% to their 15-year average of 55%, S&P 500 earnings would decline by approximately 10%. The bank advises tracking the progress of AI productivity replacing capital expenditure as the primary growth driver, noting that current market pricing already factors in earnings deceleration but has yet to price in a bubble-busting scenario.