Goldman Sachs: Focus on High-Pricing-Power Stocks Like Meta Amid Upgraded S&P 500 Outlook

While markets pause after recent gains fueled by a U.S.-China tariff deal, Wall Street strategists are turning more bullish—led by Goldman Sachs.

The investment bank has raised its six-month S&P 500 forecast to 6,100, up from 5,900, citing lower tariff risks, stronger economic growth, and reduced recession odds. On Monday, the index closed at 5,844, inching closer to breakeven for the year.

“We’re adjusting our expectations based on improved macro conditions,” said David Kostin, Goldman’s chief U.S. equity strategist. His team is now forecasting earnings per share of $262 for 2025, a 7% annual increase, up from 3% previously. For 2026, earnings are expected to hit $280, also a 7% rise.

Goldman also bumped its 12-month forward price-to-earnings multiple to 20.4x, from 19.5x, reflecting “reduced uncertainty, stronger earnings growth, lower inflation, and growing investor confidence in large-cap fundamentals.” Still, Kostin cautioned that ongoing macro risks could affect both valuations and earnings.

In a separate update, Goldman’s chief economist Jan Hatzius lowered the firm’s recession odds to 35%, down from 45%, citing a smaller drag on GDP, fewer production delays from tariffs, and a more stable trade outlook.

So where should investors look? Kostin recommends stocks with high pricing power—companies that can defend their profit margins even as input costs rise and tariffs remain higher than last year. These firms significantly outperformed during the 2018–2019 trade tensions.

Goldman isn’t alone in its optimism. Ed Yardeni of Yardeni Research raised his S&P 500 target to 6,500, cutting his recession probability to 25%. Christopher Harvey at Wells Fargo remains the most bullish strategist on the Street, projecting a year-end 2025 S&P 500 level of 7,007.