Investing.com -- Goldman Sachs said in a note Monday that it expects the U.S. equity market to continue climbing, with analyst Ben Snider setting a year-end S&P 500 target of 7,600, implying roughly 7% upside.

The forecast embeds 12% earnings per share growth in 2026 and 10% in 2027, with the index's price-to-earnings multiple held near its current level of 21 times.

"The US equity market should continue to make new highs in coming months on the back of continued earnings growth," Snider wrote.

Goldman Sachs noted that the S&P 500 has rallied 12% since March 30, its sharpest rise since April 2020, consistent with historical recoveries and an improving geopolitical outlook.

Investor sentiment has rebounded to pre-war levels, though positioning remains below prior peaks, the bank noted.

On earnings, Goldman Sachs said consensus EPS estimates for 2026 and 2027 have risen 4% since late January, underpinned by AI investment spending.

The bank estimates AI will drive roughly 40% of S&P 500 EPS growth this year, with hyperscaler capital expenditure guidance expected to be a key focus during the current earnings season.

Within equities, Goldman Sachs recommends tilting toward secular growth companies with idiosyncratic earnings tailwinds and limited AI disruption risk, specifically highlighting firms tied to power infrastructure investment.

The bank flagged narrow market breadth as a key risk, noting it has dropped to one of the narrowest levels since the Dot Com bubble.

Goldman Sachs believes "the beneficiaries of AI investment spending remain the clearest opportunity in the AI complex."