Did I mention that Goldman expects meaningful gains for US equities in 2026?

Maybe. Probably. But the bank recirculated its outlook this week, perhaps to ensure everyone’s apprised and on the same page now that the equity research department has a new lead.

Recall that long-time chief David Kostin retired at year-end, handing the reins to Ben Snider, another veteran.

The first official full-year outlook to bear Snider’s name calls for a 12% total return for the index, which should end this year at 7,600. Earnings growth will likewise be 12%, Goldman reckons.

The figure on the left, below, shows you the breakdown of returns looking back to 2022. The main takeaway is that this year, it’s all down to earnings and dividends, which is to say Goldman expects no change in the index multiple.

Of course, the S&P’s trading at a nosebleed valuation. Indeed, at 22x, the forward multiple’s just two turns shy of the dot-com peak. And as the figure on the right, above, reminds you, we’re leaning very heavily on the top 10 stocks, which last year accounted for more than half of the index’s overall return.

“The key tension in the US equity market is between a solid fundamental backdrop and multiples that rank near the highest levels on record,” Snider wrote, adding that although the bank’s base case calls for steady long-term interest rates and solid EPS growth, “elevated multiples are hard to ignore,” as is extreme market concentration.

The greater the share of index returns attributable to just a handful of companies, the higher the embedded idiosyncratic risk as investors increasingly depend “on the continued strength of the largest US companies,” Snider went on.

The figure on the left, below, gives you some historical context for current conditions inclusive of multiples, concentration and rolling returns.

The figure on the right shows you “what happened next” following the peaks illustrated on the left.

While elevated multiples and extreme concentration may increase the nascent risk of a drawdown, it’s important to remember that the kindling needs a match, so to speak.

As Snider put it, “valuations and concentration are measures of potential energy and require a catalyst to translate into equity market kinetic energy.”