Investing.com -- Goldman Sachs has raised its S&P 500 year-end target to 8,000 from 7,600 in a note on Wednesday, citing an exceptionally strong first-quarter earnings season and upgraded profit forecasts, while warning that a bumpy path lies ahead.

Goldman analyst Ben Snider said continued earnings growth should drive a further 6% rise in the index from current levels.

The firm raised its S&P 500 earnings per share forecasts to $340, representing 24% year-on-year growth, in 2026 and $385, representing 13% growth, in 2027.

Goldman believes beneficiaries of AI infrastructure investment will account for roughly half of S&P 500 earnings per share growth this year.

Despite the constructive earnings outlook, the bank feels valuation expansion is unlikely to be a meaningful driver from here. The S&P 500's forward price-to-earnings multiple has already declined 4% year-to-date even as the index has risen 10%, and Goldman said its forecasts incorporate a multiple that "remains close to the current 21x."

Snider flagged several risks. The oil shock threatens to create conditions of "disappointing growth and tightening financial conditions that have marked the ends of previous bull markets," and the earnings-driven outperformance of AI infrastructure stocks raises their hurdle going forward.

Tactically, the firm said the strength of the recent momentum-driven rally and midterm election seasonality argues for moderating returns in the coming months.

On strategy, Snider states that stocks with the strongest earnings revisions have generally outperformed year-to-date, flagging hyperscalers and power infrastructure plays as attractive opportunities within the AI buildout theme.