Goldman Sachs investment strategist Ben Snider has maintained his year-end 2026 target of 8,000 for the S&P 500, dismissing concerns over an artificial intelligence stock bubble. The target represents approximately 4.5% upside from the index's close on Friday, Oct. 16, as Snider argues that earnings growth rather than valuation expansion will drive market gains.
Snider projects that S&P 500 earnings will grow by 36% this year before slowing to an 11% increase in 2027. He has also set a year-end 2027 price target of 8,700 for the index, which would equate to an 8.75% return if the market finishes 2026 at his 8,000 level. The strategist views the current period as historically favorable for equity investors, particularly in the lead-up to midterm elections.
Historical data cited in the analysis indicates that in the years following midterm elections, the S&P 500 has posted positive returns in 95% of the eleven-month periods starting in November since 1938. Furthermore, the fourth quarter of midterm election years has been the strongest quarter for stocks since 1950, with the index rising in 84% of such periods and averaging a 6.6% return. The Carson Group notes that this strength often carries over into the following year, with the S&P averaging a 7.4% gain in the first quarter after midterms and a 5% average return in the second quarter.
While Snider emphasizes earnings as the primary driver of returns, other metrics suggest potential for multiple expansion. Yardeni Research reports that the S&P 500 carries a forward price-to-earnings ratio of below 19 times, a figure significantly lower than the approximately 65 times recorded before the dot-com bubble burst, according to Bloomberg. Despite talk of an AI bubble and high cyclically adjusted price-to-earnings ratios, the index is trading at its cheapest price/earnings-to-growth ratio in more than 30 years.
Based on five-year forward growth estimates, Yardeni Research places the S&P 500's PEG ratio at around 0.7, well below its long-term average of 1.3. This is only the fifth time since at least 1995 that the index's PEG has dropped below 1. Nvidia, which makes up roughly 7.5% of the S&P 500, is highlighted as one of the index's cheapest constituents. The stock trades at a forward P/E of 13.7 based on fiscal 2028 analyst estimates and has a PEG of 0.33.
The analysis concludes that current forward metrics indicate the market is cheap and entering a historically strong period for stocks. However, it acknowledges that no one can consistently predict market pullbacks and that historical patterns may lack sufficient sample sizes for statistical significance. The report advises staying invested, noting that time in the market has historically built more wealth than market timing.