Goldman Sachs raises STOXX 600 target on earnings, AI optimism
Goldman’s new 660 call gives the STOXX 600 room for another 5.4% gain, pushing Europe trading desks to sell a more bullish AI and earnings story.
Goldman Sachs pushed its 12-month target for the STOXX 600 to 660, a call that implies about 5.4% upside from recent levels and signals a more confident Europe stance inside the firm. The move came with higher three-month and six-month targets of 640 and 645, and a fresh earnings view that now sees STOXX 600 EPS growing 10% in 2026, up from 5% in Goldman’s January outlook.
The upgrade is not just a market call. Inside Goldman, it changes the pitch to clients across research, sales, trading and coverage: Europe is no longer being framed as a cheap, lagging alternative, but as a market still supported by resilient earnings, solid nominal growth and AI optimism even as Middle East tensions hang over sentiment. Goldman’s note said positive revisions in energy and resilient margins across the rest of the index have helped drive the rally, while inflation and expectations for interest rates to stay elevated longer are still limiting valuations.
That tension sits at the center of the new target. The STOXX 600 traded at a 12-month forward price-to-earnings ratio of 17.55, well below the S&P 500’s 27.94, giving Goldman a valuation argument it can use with international allocators looking for value and diversification. At the same time, domestic investors remain cautious because of weak growth and uncertainty, and Goldman said worries about equity supply look overstated.
The backdrop has turned more constructive in recent weeks. The index closed at 631.63 on May 25, its highest level in over two months, after gaining 2.5% in May. That left Europe’s benchmark less than 1% below its February record high and erased losses tied to the start of the Middle East conflict. For Goldman, that rebound helps explain why the firm is leaning harder into the region now than it did in January, when it first lifted its 12-month target to 625 from 615 after the index crossed 600 for the first time.
Goldman’s earlier 2026 outlook had pointed to an 8% total return, with 5% EPS growth in 2026 and 7% in 2027. The June upgrade raises the earnings assumption and makes the message clearer for clients: Europe still has room to run, but the case now rests less on mean reversion and more on earnings durability, AI enthusiasm and the relative value gap versus U.S. stocks.
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