Goldman Sachs has revised its return outlook for the S&P 500 upward, citing a more favorable Federal Reserve policy trajectory and continued outperformance by large-cap stocks.
In a note to clients, the investment bank said it now expects the S&P 500 to deliver stronger returns over the next 12 months than previously projected. The revision reflects growing confidence that the Fed will begin easing interest rates in the coming quarters, alleviating pressure on equity valuations and supporting risk appetite.
“Easing inflation and clearer signals from the Fed have improved the macro backdrop for equities,” Goldman analysts wrote. “We expect lower rates to support higher multiples, especially for high-quality large-cap names that dominate the index.”
The bank also highlighted the resilience and earnings power of mega-cap technology and growth stocks, which have led the market rally in 2025. According to Goldman, these firms continue to benefit from structural advantages in artificial intelligence, cloud computing, and platform-based business models.
Goldman’s upgraded forecast comes amid renewed investor optimism and record highs for the S&P 500. The firm stressed, however, that risks remain—including geopolitical uncertainty and the pace of global economic growth—but said the balance of factors now points to a more constructive outlook for U.S. equities.
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