Goldman Sachs just raised its S&P 500 year-end target to 8,000 from 7,600, citing explosive growth in artificial intelligence, AI infrastructure spending, and accelerating corporate earnings. The firm also raised its 2026 EPS forecast for the S&P 500 to $340 a share.
“Earnings growth has powered the entire S&P 500 return so far this year, and we expect this dynamic to continue in the coming months,” said the firm. “The increase in consensus forward EPS estimates has outpaced the S&P 500 price gain, resulting in a decline in the P/E multiple. In fact, during the past two years, near-term earnings growth has arithmetically accounted for the entire 40% rise in the S&P 500.”
The firm added that half of that EPS growth will be from AI infrastructure investment alone, which shows no signs of slowing.
- Amazon (NASDAQ: AMZN), for example, is committing about $200 billion to capex, including a massive $25 billion investment in Anthropic to build out compute infrastructure over the next decade.
- Alphabet (NASDAQ: GOOG) has plans to invest about $190 billion into AI data centers, software, and development.
- Meta Platforms (NASDAQ: META) is investing about $145 billion in AI capex.
Big Tech Spending Continues to Surge
Consider this. There are about 4,000 operational data centers in the U.S. right now. An additional 1,500 to 3,000 are being planned or under construction. According to Pew Research, the South has 754 planned data centers. The Midwest has 419 planned. The West has 277 planned, and the Northeast has about 106 planned. Globally, there are about 10,807.
Big tech is pouring hundreds of billions of dollars into data centers to secure a substantial market position. By owning this critical infrastructure, companies ensure they can control the “AI factories” that will power the next generation of software.
Data Center Growth is Exploding
The artificial intelligence boom is still accelerating.
With the global AI market already surpassing $230 billion in 2024, analysts now see a clear path to multi-trillion-dollar expansion—and the next five years may deliver the strongest gains yet.
Forecasts now place AI’s value between $1.7 and $3.5 trillion by the early 2030s, with the most aggressive estimates topping $7 trillion by 2035. And judging by the surge in corporate investment, the market is moving toward the high end of those projections.
Analysts Say AI Momentum is Just Beginning
Warnings of an “AI bubble” are increasingly being dismissed by top analysts.
Goldman Sachs says, “it believes the AI story is just getting started – and the investments that seem huge today will be dwarfed by the benefits AI will deliver,” as noted by Quartz.com.
Long term, the investment bank says that AI adoption could add $20 trillion to the U.S. economy. AI, according to Goldman Sachs, is already delivering those gains in productivity when deployed right.”
JPMorgan’s Mary Callahan Erdoes added, “AI is presenting opportunities not fully appreciated or understood yet,” as noted by CNBC. “AI itself is not a bubble. That’s a crazy concept… We are on the precipice of a major, major revolution in a way that companies operate.”
“So, if you say to yourself, is AI in a bubble, I feel you have to get very granular on how you’re going to answer that, because in the U.S., we’re starting to gain traction, but we’re nowhere near the ability to have the stuff all to the bottom line.”
The Upside Potential in the S&P 500 is Still There For Investors
With billions of dollars continuing to flow into AI infrastructure, software development, and next-generation data centers, Wall Street is becoming increasingly confident that the artificial intelligence boom still has years of growth ahead.
Goldman Sachs’ higher S&P 500 target reflects that optimism, especially as AI-driven productivity gains begin showing up in corporate earnings.
