Goldman Sachs and Deutsche Bank Agree: The S&P 500 Rally Isn't Over

Goldman Sachs pushed back hard against fears of an S&P 500 earnings bubble on Tuesday. The firm projects another quarter of double-digit growth starting next week.

Deutsche Bank echoed that confidence separately, reaffirming its year-end target of 8,000 points for the benchmark index.

Goldman Sachs Dismisses S&P 500 Bubble Talk, Reaffirms Bullish Outlook

An earnings bubble is a scenario in which corporate profit growth becomes unsustainable. That imbalance eventually forces a sharp correction once reality catches up with inflated expectations.

Ben Snider, Goldman’s chief U.S. equity strategist, argued that the description doesn’t fit today’s market. Speaking on Bloomberg Open Interest, Snider said a bubble implies earnings are about to pop. Goldman simply doesn’t see that happening.

Aggregate S&P 500 earnings are currently climbing more than 30% year over year. The median stock, meanwhile, still posts a solid 14% gain.

Some deceleration looks likely as fiscal tailwinds fade and energy costs rise, Snider acknowledged. Even so, he expects results to remain robust. Third-quarter GDP tracking currently points above 3% growth.

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On artificial intelligence specifically, Snider said token consumption and compute demand should continue to rise through 2027, sustaining one of the market’s key earnings tailwinds.

Investor positioning, he noted, currently sits at its lowest level since March, a sign of widespread caution that could fuel further upside if catalysts such as falling oil prices or lower rates materialize.

Why Is Deutsche Bank Just as Bullish Right Now?

Deutsche Bank’s equity strategy team, led by Binky Chadha, published a note titled “To 8,000 and Beyond?” pointing to several factors supporting their optimistic stance.

Third-quarter earnings should deliver roughly 30% year-over-year growth, mirroring an equally strong second quarter. The bank also raised its 2027 earnings-per-share forecast to $420, implying growth of nearly 17%.

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History adds another layer of support. Chadha’s team highlighted that 21 of the past 23 mid-term election years produced positive fourth-quarter returns, averaging a 7% gain. Positioning, technical indicators, and supply-demand dynamics all continue tilting favorably, the bank added.

Both firms ultimately arrive at a similar conclusion. Extraordinary earnings growth seen throughout 2026 will likely moderate somewhat, yet neither expects anything resembling a collapse.

As long as companies keep delivering double-digit or high-teens profit expansion, backed by AI-related investment and a resilient broader economy, Wall Street’s two most prominent bullish voices see meaningful room for the S&P 500 to climb further into year-end and beyond.