Goldman Sachs Says Look for Stocks With Strong Pricing Power, Like Meta
Despite markets taking a breather from recent tariff-deal-driven gains, some Wall Street strategists remain optimistic—Goldman Sachs among the most bullish.
In its latest outlook, the bank raised its six-month S&P 500 target to 6,100, up from 5,900, citing lower tariff risks, improved economic growth, and reduced recession odds. The index closed Monday at 5,844, nearly flat for the year.
Goldman’s chief U.S. equity strategist, David Kostin, said the team has increased its return and earnings forecasts based on these improved conditions. Meanwhile, chief economist Jan Hatzius lowered the bank’s recession probability to 35%, down from 45%, noting a smaller expected impact on GDP from tariffs and a more positive outlook on future trade policy.
Goldman now expects S&P 500 earnings per share to reach $262 in 2025 (a 7% year-over-year increase, up from a prior 3% estimate) and $280 in 2026 (also 7% growth). The firm also raised its 12-month forward price-to-earnings (P/E) multiple projection to 20.4x, from 19.5x, citing lower inflation and renewed confidence in large-cap fundamentals. However, they caution that high uncertainty still poses risks.
As for stock picks, Kostin recommends focusing on companies with high pricing power—firms that can sustain margins despite elevated input costs and lingering tariffs. Stocks with strong pricing power notably outperformed during the 2018–2019 U.S.-China trade conflict.
Goldman isn’t the only firm revising its outlook upward. Ed Yardeni of Yardeni Research increased his S&P 500 forecast to 6,500 and cut recession odds to 25%. The most bullish call currently comes from Christopher Harvey of Wells Fargo Securities, projecting a 7,007 year-end level for the index.
