Where Goldman Sachs says the S&P 500 is headed next year and in the next decade

By Barbara Kollmeyer

On the downside, strategists are worried about possible 'superstar' tech stocks losing their shine

Goldman Sachs sees the S&P 500 rising over the next 10 years, but investors should temper their expectations.

Stepping up as one of the first Wall Street banks to roll out forecasts for next year, Goldman Sachs strategists see the S&P 500 hitting 7,600 by the end of 2026, an 11% gain from here.

Taking things a step further, a team led by chief global equity strategist Peter Oppenheimer has come up with a long-term forecast for the S&P 500 SPX to deliver a 6.5% annualized return over the next 10 years. That's slightly below their forecast of a 7.7% annualized return for global equities.

It's also not that great historically - the 27th percentile of returns since 1990.

The Goldman team says its 10-year S&P 500 forecast includes bearish and bullish cases in a range of 3% to 10%.

The 6.5% return comprises 6% annualized earnings per share growth, a 1% annualized decline in valuations and a 1.4% average dividend yield.

The forecast also "embeds corporate revenue growth roughly in line with nominal GDP growth," while a modest weakening of the U.S. dollar could also boost revenue somewhat.

Goldman points out that the index's net profit margin is near record highs, at 13% presently from 5% in 1990, driven by the integration of global supply chains as well as falling interest rates and corporate taxes. The strategists don't, though, expect those tailwinds to boost profits as much going forward.

Goldman's valuation forecast, which embeds long-term forecasts for interest rates and inflation, and a nominal Treasury yield of 4.5% in 2035, "assumes roughly no change in corporate profitability in the next decade." That translates to a forward price-to-earnings multiple of 21 times in 10 years for the S&P 500, which is a decline of 10% from the 23 times present multiple.

"Going forward, without a dramatic increase in interest rates and/or sharp decline in corporate profitability, we think it likely that U.S. equity valuations will remain above long-term averages," said Oppenheimer and his team.

A major uncertainty around their long-term forecast surrounds "extreme" equity concentrations by the biggest U.S. companies, whose "extraordinary" earnings strength and valuations have driven up multiples and returns for stocks in recent years.

Read: Sick of hearing about the AI trade? BofA offers 16 hot stock picks that go far beyond tech.

"If these companies maintain their dominance, equity market returns during the next decade will likely surpass most forecasts, as they have during the past decade. In contrast, if the profitability and/or valuations of the largest companies falter, unless another cohort of 'superstars' emerges, returns for the broad market will likely be hampered as today'slargest stocks fall back to earth," Goldman writes.

AI presents the biggest upside risk to their profit forecast, either by driving stronger-than-expected economic and revenue growth or from companies using it to "meaningfully" boost profit margins. If the equity market weight of the tech sector continues to climb, it will also boost average earnings per share growth to 9% rather than a forecast 6%, they note.

Read: The Santa rally still arrives when the stock market sputters to open November, history shows

The markets

U.S. stocks SPX DJIA COMP are rising as investors look to a vote on the shutdown and earning, with the yield on the 10-year Treasury note BX:TMUBMUSD10Y is lower as bond trading resumes after Veterans Day.

   Key asset performance                                                Last       5d     1m      YTD      1y 
   S&P 500                                                              6846.61    1.11%  3.04%   16.41%   14.42% 
   Nasdaq Composite                                                     23,468.30  0.51%  4.20%   21.53%   21.71% 
   10-year Treasury                                                     4.09       0.10   5.70    -48.60   -35.00 
   Gold                                                                 4122.7     3.32%  -2.42%  56.20%   59.89% 
   Oil                                                                  60.78      1.91%  3.46%   -15.43%  -10.67% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

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The buzz

The Republican-controlled House will vote on a spending package that passed the Senate on Monday and could end the government shutdown. That's as McDonald's (MCD) and other companies say SNAP benefit delays may be piling extra pressure on consumers.

Advanced Micro Devices shares (AMD) are climbing after an upbeat revenue forecast from CEO Lisa Su.

Bill Holdings stock (BILL) is shooting up on a report the business-payments firm could be pursuing a sale.

Earnings from Cisco (CSCO) are due after the close.

In a busy Fed day, New York Fed President John Williams will address the 2025 U.S. Treasury Market Conference at 9:20 a.m., followed by Treasury Secretary Scott Bessent. Elsewhere, Fed governor Christopher Waller will address the Philadelphia Fed Annual Fintech Conference at 10:20 a.m.

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The chart

Mark Newton, head of technical strategy at Fundstrat, shares a chart of the Commodity Index - 15% gold, 10% natural gas and around 10% West Texas Intermediate crude and Brent and gasoline - that has pushed back to multiyear highs. "This appears like a fairly bullish intermediate-term breakout for commodities, and I expect that commodities (as a group) will likely continue to trend higher into 2026," he says. The strategist is negative on crude in December and January, but positive on energy overall in the weeks to come, and likes soybeans, corn, and coffee. Separately, the International Energy Agency now says that oil and gas demand might not peak at the end of this decade.

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   AMD     Advanced Micro Devices 
   PLTR    Palantir Technologies 
   AAPL    Apple 
   CRWV    CoreWeave 
   GME     GameStop 
   META    Meta 
   TSM     Taiwan Semiconductor Manufacturing 
   AMZN    Amazon.com 

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-Barbara Kollmeyer

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11-12-25 1009ET