This article first appeared on GuruFocus.
Goldman Sachs said U.S. stocks show more signs of exuberance after a sharp AI-led rally, but it still sees the market short of the extremes that marked earlier bubbles.
The bank said the S&P 500 has climbed 13% since late March, with the run-up powered by artificial intelligence enthusiasm and momentum trading.
Goldman said its nine indicators of market behavior, sentiment and positioning now sit around the 86th percentile versus history since 1995. That is below the peaks reached in the dot-com era and the 2021 market surge, even as market breadth has narrowed and high-valuation trading has intensified.
The bank said the advance has been supported by improving earnings expectations, with consensus S&P 500 earnings forecasts rising 16% this year, outpacing the index’s 8% gain. Goldman also sees 2026 S&P 500 earnings at $340 a share, up 24% from 2025.
Sentiment signals remain mixed. Goldman pointed to elevated short interest and a U.S. investor survey that showed bears slightly outnumbering bulls, while its own U.S. equity sentiment gauge remained low. The bank said the setup looks frothy, but not yet like a full-blown bubble.
