Why the Stock Market Bull Run May Defy Slowing Profit Growth in 2027
New York, Friday, 13 November 2026.
Despite corporate earnings growth sharply decelerating heading into 2027, Goldman Sachs forecasts the S&P 500 will climb 14% to 8,700, driven by lower yields and resilient balance sheets.
Earnings Growth Projection for 2027
Goldman Sachs’ latest market preview forecasts a sharp deceleration in corporate earnings growth across major equity benchmarks for 2027, with the firm projecting earnings growth to nearly halve compared to 2026 [1][5]. The S&P 500’s earnings per share (EPS) growth is expected to decline from 36% in 2026 to 11% in 2027, while the Euro Stoxx 600’s EPS growth is projected to fall from 18% to 7% [5]. This deceleration reflects broader macroeconomic headwinds, including tighter financial conditions and peaking trends in AI capital expenditure [4][5]. Despite this slowdown, Goldman Sachs maintains that the bull market will remain intact, driven by sustained capital deployment and selective corporate resilience [1][5].
Sector-Specific Resilience and Defensive Strategies
Amid the projected earnings slowdown, healthcare stands out as the sole sector expected to accelerate its earnings growth in 2027, offering a defensive rotation strategy for asset allocators [1]. Goldman Sachs strategists emphasize focusing on companies capable of sustaining growth as broader expansion becomes scarcer [1][5]. The firm advises investors to prioritize firms with strong balance sheets and long-term growth potential, particularly in the U.S. and Japan, where valuations are deemed more attractive [5]. European equities, on the other hand, are viewed as underweight due to limited valuation pullbacks, government debt concerns, and a packed political calendar [5].
Market Outlook and Strategic Recommendations
Goldman Sachs forecasts the S&P 500 will rise 14% to 8,700 points by the end of 2027, driven by lower bond yields, easing inflation, and declining oil prices [3][5]. The firm’s chief global equity strategist, Peter Oppenheimer, projects 11% earnings growth in 2027, supported by more attractive valuations and lower borrowing costs [3]. While equities are expected to continue rising, Goldman warns that volatility will remain elevated, particularly as AI-related stock rallies potentially lose momentum [4]. The bank also highlights the cost of funding the AI boom, noting that record credit and equity issuance has been digestible thus far but may face challenges if financial conditions tighten [4].
Macroeconomic Context and Risks
The macroeconomic backdrop for 2027 appears supportive, with stable global growth and declining inflation providing a favorable environment for equities [4]. However, Goldman Sachs cautions that risks remain tilted to the downside as the market cycle matures [4]. One of the largest near-term risks identified is a potential spike in energy prices driven by renewed geopolitical escalation in the Middle East [4]. Additionally, the bank flags that a broader handoff in equity gains—from AI infrastructure to other sectors—could be derailed by tighter financial conditions [4]. Emerging markets are viewed favorably for their high, diversified yields and regionally diverse earnings, though Europe is explicitly underweight due to structural challenges [5].