Goldman Raises STOXX 600 Target to 660 on AI, Earnings

Goldman Sachs raised its 12-month target for the STOXX 600 index to 660 in a note dated Friday. The bank also set three- and six-month targets at 640 and 645. The new 12-month target implies roughly a 5.4% upside from the index’s last close of 626.

Goldman pointed to resilient corporate earnings, ongoing investment tied to artificial intelligence, positive revisions in the energy sector and generally steady profit margins as factors supporting European equities.

The bank warned that inflationary pressure and expectations that interest rates may remain higher for longer are constraining valuations. It said those macroeconomic headwinds are likely keeping price multiples below where they might otherwise be.

Goldman highlighted a valuation gap between regions: the STOXX 600’s 12-month forward price-to-earnings ratio stood at 17.55, compared with a forward P/E of 27.94 for the S&P 500. The firm said that lower forward multiples in Europe continue to attract international investors seeking relative value and diversification.

On earnings, Goldman forecast 10% earnings-per-share growth for the STOXX 600 in 2026, slowing to 5% in 2027 as higher energy costs begin to weigh on margins. The bank noted the recent rally has been concentrated in AI-linked names and the energy sector, while consumer-focused sectors have lagged.

The STOXX 600 gained about 2.5% in May and remains close to record highs. Goldman said heightened tensions in the Middle East have limited further upside by keeping investor caution elevated.

The note described differences in investor positioning: international buyers continue to direct capital toward European equities, while domestic investors remain more cautious, citing worries about weak economic growth and broader uncertainty.

On market structure, Goldman argued concerns about equity supply may be overstated and wrote that there is “appetite for the market to absorb more.”

The updated targets and forecasts appear alongside the bank’s view that earnings resilience, AI-related investment themes and international inflows are key factors for European equities, even as geopolitical risks and higher-for-longer rates act as restraints.