After Trump’s tariff blitz upended Wall Street forecasts for 2025, Goldman Sachs is doubling down on its bullish outlook.
The bank reiterated a 12-month price target of 6,900 for the S&P 500 Index, citing a combination of Federal Reserve rate cuts and the continued dominance of large-cap stocks.
The forecast comes about six weeks after Goldman first raised its outlook for 2025 and beyond, pointing to stronger earnings growth and expectations of a Fed pivot.
Goldman now targets 6,600 for the S&P 500 by year-end and 6,900 within 12 months — implying gains of 2.5% and 7% from current levels, and suggesting record highs could keep climbing.
undefinedGoldman Sachs continues to forecast that the S&P 500 will climb to 6,600 by year-end and 6,900 within a year, driven by anticipated earlier Fed rate cuts and the ongoing strength of large-cap stock fundamentals.undefined - @ISABELNET_SA pic.twitter.com/Z6B9lHs7BK
undefined Lance Roberts (@LanceRoberts) August 25, 2025
Although overvaluation risks linger after the S&P 500’s sharp rebound since April, Goldman argues that mega-cap stocks remain the tide lifting the broader market.
Magnificent 7 earnings power
Earnings among the so-called Magnificent 7 — Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Meta (META), Nvidia (NVDA), and Tesla (TSLA ) — have surged 145% since November 2022 when OpenAI launched ChatGPT.
This is unprecedented:
undefined The Kobeissi Letter (@KobeissiLetter) August 25, 2025
Earnings of the Magnificent 7 companies have surged +145% since ChatGPT was introduced in November 2022.
By comparison, profits of the remaining 493 S&P 500 firms have increased just +4% over the same period.
Furthermore, the Mag 7’s EPS has risen… pic.twitter.com/6MNd2tjhsj
By contrast, the other 493 companies in the S&P 500 have managed just 4% earnings growth over the same period.
While November 2022 may be a curious starting point for the analysis, the results hint that the Magnificent 7 have benefited from efficiency gains tied to artificial intelligence adoption.
According to The Kobeissi Letter, the trend goes back much further: “Over the last decade, the Magnificent 7 has seen a massive +2,134% growth in earnings.”
The dangers of “narrow breadth”
Analysts are pointing to the outsized role of Big Tech and the Magnificent 7 in driving this stock rally, warning that such extreme concentration could pose long-term risks to the S&P 500.
Goldman Sachs said that “narrow breadth often signals the risk of larger-than-average drawdowns” in stock markets.
Even so, Goldman’s analysts remain optimistic, arguing that a “catch-up” by lagging stocks is more likely than a “catch-down” by market leaders as the rally widens in the months ahead.
A recent Dow Jones commentary in Morningstar is on board with this view, noting that anticipated rate cuts could help extend and broaden the stock market rally.
The commentary pointed to research by Carson Group’s Ryan Detrick, who found that the S&P 500 has typically rallied in the year after rate cuts, particularly when the Fed waits five to 12 months before easing again.
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