Goldman Sachs Strategist Dismisses Concerns Over US Earnings Bubble
Goldman Sachs strategists, led by Ben Snider, argue that concerns about an 'earnings bubble' in the U.S. are unfounded due to a strong economic outlook and growth from artificial intelligence investments. S&P 500 firms have seen significant profit jumps of around 30% for two consecutive quarters—the best performance on record—according to Bloomberg Intelligence data. While current earnings momentum is robust, Snider expects the pace of profit growth to slow in coming years rather than collapse entirely. The team forecasts an 11% increase next year and anticipates that AI-driven boosts will begin fading by 2027 despite ongoing capital spending increases. They also predict a 14% rally for the S&P 500, driven primarily by earnings growth. In contrast, Bank of America strategists warn investor positioning remains overly bullish given expectations for slower profit growth in the future. Despite recent market volatility and inflation concerns, U.S. stock funds have seen significant inflows, with nearly $64 billion added over a single week—the largest three-month influx on record.
Topics: AI investments economic growth Goldman Sachs profitability S&P 500