Goldman Sachs Warns of Frothy AI Rally as S&P Gains 13%

GS•

2026-06-08

Goldman Sachs warns U.S. stocks show exuberance after an AI-driven rally lifted the S&P 500 by 13% since late March, with its nine market indicators at the 86th percentile. The firm sees consensus S&P earnings rising 16% this year and forecasts 2026 per-share earnings of $340, up 24%.

1. AI-Driven Rally Assessment

Goldman Sachs highlights that artificial intelligence enthusiasm has powered a 13% climb in the S&P 500 since late March, driven by momentum trading and elevated investor interest in AI-related names.

2. Market Indicators Status

The bank’s nine measures of market behavior, sentiment and positioning now sit at the 86th percentile versus data since 1995, signaling elevated but not extreme bubble-like conditions.

3. Earnings Forecast Outlook

Consensus forecasts for S&P 500 earnings have risen 16% for the current year, and Goldman projects per-share earnings of $340 in 2026, a 24% increase from 2025.

4. Sentiment and Market Risks

Despite strong gains, market breadth has narrowed and high-valuation trading intensified, while elevated short interest and a low equity sentiment gauge suggest mixed investor confidence.