Goldman Sachs strategists indicate that while S&P 500 companies have recently been in a phase of "earnings beats," corporate profit growth is likely to merely decelerate rather than crash, buoyed by productivity gains from artificial intelligence.

The team led by Ben Snider projects an 11% growth rate for S&P 500 earnings per share (EPS) in both 2027 and 2028. This year, AI-related investments have contributed to nearly half of the index's overall earnings growth.

However, the strategists anticipate that as capital expenditure slows, AI's stimulative effect will shift from boosting earnings by 11 percentage points in 2026 to becoming a slight drag by 2028. They expect AI-driven productivity enhancements to progressively replace investment as the primary earnings driver, contributing 1 percentage point to EPS growth in 2027 and 2 percentage points in 2028.

The strategists note that the semiconductor industry's exceptionally high profit margins and periodic investment gains are two other reasons why current earnings sit above their trend level. If semiconductor gross margins were to retreat to the 15-year average of 55%, S&P 500 earnings would decline by approximately 10%.

The team maintains its S&P 500 price targets for 3-month, 6-month, and 12-month horizons at 8,000, 8,300, and 8,700 points, respectively. They expect that future market advances will be propelled by earnings growth itself, rather than by valuation expansion.