Goldman Sachs: S&P 500 Earnings Up 26%, But Not a Bubble

Goldman Sachs' September 17, 2026 research report noted that S&P 500 earnings per share grew 51% year-over-year in the second quarter, with growth of 26% over the past four quarters. Goldman believes earnings are exceptional but not a bubble, with a base case of slowing growth rather than a collapse; it projects EPS growth of 11% in both 2027 and 2028, reaching $415 and $460 respectively, with a 12-month target index of 8,700 points.

The report stated that AI capital expenditure contributed nearly half of this year's earnings growth, but its contribution will decline from 11 percentage points in 2026 to 7 percentage points in 2027, turning negative at 1 percentage point in 2028. Goldman listed AI capex, semiconductor gross margin expansion, and equity investment income as three major temporary drivers, noting that if semiconductor gross margins fall from 70% back to the 15-year average of 55%, S&P 500 earnings would decline by approximately 10%. The firm suggests monitoring whether AI productivity can replace capex as a new driver, and believes the market has priced in earnings slowdown but has not yet factored in a "bubble burst" scenario.

[TechFlow]