0:00

U.S. equities have staged a remarkable rally in

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the first half of this year. But is

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the bull market still on firm footing? And

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how optimistic should investors be now? If

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I think about the series of earnings

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reports that we'll get in the second

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half of this year, there will be

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a lot of focus on what is

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the potential revenue gains and earnings contributions

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coming from all this investment that's being

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made in AI. There's a lot of

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questions around that. I'm Alison

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Nathan, and this is Goldman Sachs Exchanges. How

0:30

do you think the market will be

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changing? Today

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I'm sitting down with my colleague

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in Goldman Sachs research, David Costin,

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Chief U.S. Equity Strategist. David recently

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boosted his S&P 500 year-end target

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from 5200 up to 5600. We'll

0:49

talk about what's changed, what investors should focus on

0:51

now, and what the rest of the year could

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bring. David, it is great to have you back

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on the program. Alison, thanks for inviting

0:57

me. David, when you made

1:00

your recent upgrade, you made the

1:02

very interesting observation that five stocks

1:04

have been responsible for 60% of

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the rally year to date. There's so much

1:10

focus on market concentrations today. Is that concentration

1:12

concerning to you at all? I

1:14

think the best way to frame the

1:16

return for the U.S. equity market this

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year is to keep two numbers in

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mind. The first is that the S&P

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500 index, which is a capitalization-weighted index,

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has risen by 15% year to date.

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In comparison, the typical stock has

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risen 5%. And that

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difference is really a reflection of

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the point you made that five

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leading stocks, mostly associated with artificial

1:40

intelligence, they have driven the market

1:43

capitalization index up 15%. So

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those companies include Nvidia, Amazon,

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Microsoft, Google, also known as

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Alphabet, and Meta. They're

1:53

the companies that are making significant investments

1:55

in their CapEx and R&D. That

1:58

is totally now around.