A record wave of artificial intelligence-driven earnings growth is convincing Goldman Sachs that U.S. stocks still have room to run.

In a note published Tuesday, Goldman Sachs analysts led by Ben Snider raised their year-end target for the S&P 500 from 7,600 to 8,000. That implies about a 6% upside from where the index sits today.

The New York-based bank also lifted its earnings forecasts sharply after what it called an "exceptionally strong" first-quarter reporting season.

"We expect the S&P 500 will rise by 6% to our revised year-end target of 8,000," the report stated. "The increased return forecast reflects increased estimates for S&P 500 earnings following an exceptionally strong Q1 reporting season."

Goldman now expects S&P 500 earnings per share to hit $340 in 2026, up 24% year-over-year, and $385 in 2027, another 13% increase.

The upgrade also moves Goldman off the cautious end of Wall Street. Its new 8,000 call now sits in the Street's top-range pack, in line with Deutsche Bank and Morgan Stanley and just below the most bullish forecasts.

10 Most Bullish S&P 500 Year-End Targets By Wall Street Firms

AI Build-Out Is Powering Nearly Half Of Earnings Growth

Goldman is not betting on richer valuations. It is betting on AI-driven earnings.

The bank said companies benefiting from the AI infrastructure boom are expected to account for roughly half of total S&P 500 EPS growth over the next two years.

Semiconductor stocks remain at the center of that expansion. According to Goldman, consensus estimates imply that Nvidia Corp. (NVDA) and Micron Technology Inc. (MU) alone could account for roughly one-third of S&P 500 EPS growth this year.

The report also highlighted hyperscalers and power infrastructure companies as some of the most attractive opportunities within the AI trade.

"Among firms involved in the AI build-out, stocks tied to investment in power infrastructure and the hyperscalers stand out as particularly attractive opportunities," Snider said.

"Earnings growth has powered the entire S&P 500 return so far this year," he added.

Goldman indicated that while semiconductor shares have recently surged faster than earnings revisions, large-cap cloud companies such as Amazon.com Inc. (AMZN), Alphabet Inc. (GOOGL), Meta Platforms Inc. (META) and Microsoft Corp. (MSFT) have collectively lagged the pace of their forward earnings growth.

The Oil Shock Is The Crack In The Thesis

Goldman flagged that the conditions which have historically ended high-valuation bull markets — speculative mania and deteriorating fundamentals — remain mostly absent, but that some yellow flags are appearing.

The closure of the Strait of Hormuz is the central one. "The oil shock threatens to create the conditions of disappointing growth and tightening financial conditions that have marked the ends of previous bull markets," the note said.

Higher energy prices should mean weaker consumer spending, more margin pressure, hotter inflation and less Federal Reserve easing than the bank expected coming into the year — the exact ingredients that have marked the end of past market runs. For now, the offset is profits.

Goldman also cautioned that the massive AI spending cycle will eventually need to translate into lasting productivity gains and sustainable cash flows.

"The biggest question for the valuations of most stocks in the market is the impact of AI on long-term earnings growth," Snider wrote. "That question is unlikely to be resolved any time soon."

For now, however, Goldman's message remains clear: earnings momentum — particularly tied to AI infrastructure spending — continues to overpower macro concerns and keep the U.S. equity bull market alive.

The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, is up in the pre-market session and currently trading at around $751.94 per share.