Analysts See More Upside for S&P 500, VOO

FactSet projects 23.3% earnings growth for the S&P 500 this quarter as earnings season begins next week. If the estimate holds, it would be the second consecutive quarter with earnings growth above 20%.

Final reported growth has tended to exceed initial estimates. First-quarter earnings rose more than 28% versus an expected 15%. Company reports issued before the season show accelerating revenue: Micron reported third fiscal-quarter revenue up more than 300% and management expects the next quarter’s revenue to reach $50 billion. Analysts’ consensus projects Nvidia revenue at $91.73 billion, up about 96.2% year‑over‑year; AMD revenue is forecast to rise roughly 46.7%; Marvell revenue is expected to increase near 35%.

Valuation metrics remain near recent averages. FactSet lists the S&P 500’s forward price-to-earnings ratio at 20.4, compared with a five-year average of 19.9 and a ten-year average of 19.0.

Technical indicators show the index trading near 7,537, roughly 20% above its low for the year. The S&P remained above both its 50-day and 100-day moving averages and formed a symmetrical triangle after a rally from 6,312 to a 7,621 high.

Macro readings include a decline in inflation expectations: the 10-year breakeven inflation rate fell to about 2.24% from a year-to-date high near 2.47%. Crude oil prices have eased. Recent U.S. nonfarm payrolls and PMI data were weaker, lowering pressure for immediate additional rate hikes. Federal Reserve officials indicated they could support higher rates later in the year.

Major firms adjusted their S&P 500 targets and offered sector views. Goldman Sachs raised its year-end target to 8,000, writing, “We believe there is upside risk to consensus capex estimates in 2027. Analysts have been too conservative during each of the past three years.” Oppenheimer projects the index at 8,100. Morgan Stanley strategist Mike Wilson projected a correction in semiconductor stocks as investors rotate toward hyperscale cloud companies while maintaining a view that the S&P 500 will finish the year above current levels.

Earnings releases, valuation measures, technical patterns and incoming macro data will be monitored closely by market participants as the earnings season unfolds.