Goldman Sachs strategists believe U.S. equities still have room to advance, projecting the S&P 500 will reach 7600 by year-end, with earnings growth serving as the primary catalyst.

A team led by Ben Snider indicated that, given current market pricing reflects economists' forecasts for "solid but below-trend" GDP growth, they advise investors to shift their focus toward long-term growth companies rather than cyclical ones.

The strategists added that U.S. stocks have reached new highs, driven by upward revisions to earnings estimates, while valuation multiples remain below pre-war levels.

They noted that a surge in artificial intelligence-related investments is expected to contribute roughly 40% of the S&P 500's earnings growth this year, but this has also compressed valuations in certain market segments. They emphasized that the market breadth of the S&P 500 has narrowed to one of its lowest levels since the dot-com bubble burst.