The S&P 500 has continued to perform strongly in 2026 despite geopolitical uncertainty from the Iran war, supported by resilient U.S. and global growth, robust technology and energy earnings, and the ongoing artificial intelligence boom. As of May 28, 2026, the index was up 10.6% year to date and had risen about 6.2% over the previous month.
A major milestone came for Vanguard’s S&P 500 ETF, VOO, which became the first exchange-traded fund to surpass $1 trillion in assets under management. Vanguard said the fund reached that level on June 2, 2026, underscoring the dominance of low-cost index investing. By comparison, SPDR S&P 500 ETF Trust (SPY) managed about $784.63 billion, while iShares Core S&P 500 ETF (IVV) held about $859.5 billion. VOO and IVV charge 3 basis points in fees, while SPY charges 9 basis points.
Goldman Sachs has turned more bullish on the S&P 500, raising its year-end 2026 target to 8,000 from 7,600. The new target implies about 6% upside from May 26 levels and reflects stronger earnings expectations rather than a higher valuation multiple. The firm now expects S&P 500 earnings per share to reach $340 in 2026, up 24% from the prior year, and $385 in 2027, another 13% increase.
AI-related investment remains a central driver of the outlook. Goldman Sachs estimates that companies benefiting from artificial intelligence infrastructure spending will account for roughly half of total S&P 500 earnings growth in 2026 and 2027. It projects hyperscale technology companies will spend nearly $754 billion on capital expenditures in 2026, an 83% increase from 2025, with spending rising further to $905 billion in 2027. Semiconductor makers remain the clearest beneficiaries, while technology hardware, industrials and utilities are also seeing earnings support.
Earnings season has also been broadly strong. Through May 20, 2026, results from 462 S&P 500 companies, or 92.4% of the index, had been reported. Combined first-quarter earnings are on track to set a new quarterly record of $689.8 billion, above the previous record of $655.4 billion. Reported earnings were up 21.1% year over year on 10.4% higher revenue. Nearly 80% of reporting companies beat EPS estimates, while 78.6% beat revenue forecasts.
Despite the upbeat earnings picture, valuations remain elevated. The S&P 500 trades at about 21 times forward earnings, which Goldman says is in the 88th percentile of the past 40 years. While lower Treasury yields could help support valuations, slower growth, geopolitical uncertainty and questions about the durability of AI profits remain risks.
The rally has also become more concentrated in AI-linked stocks, narrowing market breadth and increasing momentum-driven trading. Goldman expects market gains to moderate in the coming months as economic growth slows, seasonal weakness appears ahead of U.S. midterm elections, and earnings comparisons get tougher. The firm still sees AI productivity eventually lifting earnings growth, but investors are likely to remain focused on whether massive AI spending produces lasting returns.
