On October 8th, Caixin reported (Editor: Bian Chun) that the Goldman Sachs strategist raised the year-end target price of the s&p 500 index for the third time this year because of the expected further expansion of corporate profits, and macroeconomic prospects are expected to remain stable until 2025.

Goldman Sachs' Chief U.S. Stock Strategist, David Kostin, stated in a report released last Friday that he now expects a target price of 6000 by the end of this year. $S&P 500 Index (.SPX.US)$ This will be the second highest target price given by Wall Street strategists this year.

As of Monday's close, the s&p 500 index fell by 0.96%, to 5695.94 points, as traders reduced their bets on a Fed rate cut.

Kostin's target price implies that the potential roi of the s&p 500 index in the remaining less than three months of this year is approximately 5%.

At the end of last year, Kostin and his team set the s&p 500 index year-end target price for 2024 at 4700 points. In February of this year, the team raised the s&p 500 index target price to 5200 points, and in June, it was raised again to 5600 points.

Kostin also raised the bank's 12-month target price for the s&p 500 index from 6000 points to 6300 points.

The company's profit is expected to further expand.

"The main driver behind our upward revision of the 2025 earnings per share expectations is the further expansion of (enterprise) profits," Kostin said. "We expect (enterprise) sales to grow by 5%, roughly in line with nominal GDP growth. We now anticipate a 78 basis point increase in (enterprise) net profit margin in 2025, up from the previous expectation of 24 basis points."

Kostin noted that his assumptions are based on relatively 'stable' macroeconomic outlook, with an average real GDP growth rate of 2.3% in the USA in 2025 and 2.0% in 2026.

At the micro level, Kostin emphasized three reasons why he expects further expansion of corporate profits in the coming year.

Firstly, Kostin stated that in 2024, certain S&P 500 index component companies' special expenses and write-downs weighed on corporate profits, which should ease in 2025. These companies include Bristol-Myers Squibb, Gilead, and Warner Bros. Discovery.

Secondly, Kostin believes the semiconductor cycle recovery should boost technology companies' earnings per share in 2025.

"The shipment volume of integrated circuits (excluding memory chips)—a forecast indicator of semiconductor margins—is about 10% lower than historical trends. The return to trend should lead to margin expansion before 2026," Kostin explained.

Lastly, large technology companies are expected to continue achieving robust profit growth, partly attributed to the artificial intelligence trend.

"The recent Goldman Sachs conference on technology has shown that the demand for artificial intelligence remains strong, which should benefit stocks in this sector," Kostin said.

Editor/Somer