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Microsoft, Nvidia, Google, Amazon.com, and Meta Platforms have
collectively surged by 45% and now comprise 25% of the S&P 500
equity cap, the brokerage said in a note after markets closed on
Friday.
"The drivers of the rally include upward revisions to consensus
2024 earnings estimates for these same tech companies, and
valuation expansion stemming from increased investor enthusiasm
about artificial intelligence (AI)."
The upgraded target reflects an upside of about 3.1% to the
index's last close of 5,431.60.
The brokerage expects roughly unchanged real yields by the
year-end and strong earnings growth to support a 15x P/E for the
equal-weight S&P 500 Index.
"The (U.S.) election remains a key risk to the S&P 500 level and
falls between our 3-month and year-end forecast horizons," said
analysts at Goldman Sachs.
The United States will hold its next presidential election in
November this year.
The brokerage added that index volatility increases before the
election during election years, but following the election,
volatility typically subsides and the S&P 500 index rebounds to
an even higher level.
(Reporting by Reshma Rockie George in Bengaluru; Editing by
Sherry Jacob-Phillips and Rashmi Aich)
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