Anticipated Stock Market Upsurge in 2025 Predicted by Goldman Sachs
Goldman Sachs analysts forecast a continuation of the stock market rally this year, albeit with a different trajectory than investors may anticipate. The financial firm expects the S&P 500 to grow by approximately 11% over the next 12 months, targeting an index level of around 6,500 points by mid-2026.
The optimistic outlook is based on better-than-expected Q1 2025 earnings reports and a more favorable U.S. economic outlook following recent trade developments. As of now, S&P 500 earnings for Q4 2024 have increased by 12% year-over-year, according to David Kostin, a strategist at Goldman Sachs.
However, it's important to note that this growth rate pales in comparison to the index's gain of around 25% in the previous year. Hence, Goldman Sachs no longer expects a similar rally. For the year 2026, the firm forecasts only a growth of seven percent.
The dampened outlook is tied to the performance of the so-called Magnificent Seven, which have contributed significantly to the stock market gains in recent years. According to Goldman Sachs, the excessive earnings growth of this group, including Microsoft and Amazon, will decline dramatically over the next two years. The analysts predict that by 2026, these seven companies will contribute just four percentage points to the overall growth, down from 32 percentage points in 2024.
In light of this development, investors are advised to diversify their portfolios across different sectors when selecting stocks. Options for diversification can be found in the Stocks for the Ages Index from BÖRSE ONLINE.
Investors planning to allocate funds in the stock market may consider Goldman Sachs' forecast of a 11% growth in the S&P 500 over the next 12 months, with a focus on a more diversified investment strategy due to the predicted decline in the contribution of the Magnificent Seven to the total growth. Although investing in stocks can offer potential returns, it's crucial to evaluate the financial health and performance of the companies involved, as well as the broader market factors.
