GoldmanSachs

GlobalInvestmentResearch

TheGoldmanSachsGroup,Inc.

2025USEquityMarketOutlook

TheArtoftheDeal

November19,2024

DavidJ.Kostin

ChiefUSEquityStrategistBenSnider

Goldman,Sachs&Co.

1-212-902-6781

david.kostin@

SeniorUSEquityStrategistRyanHammond

Goldman,Sachs&Co.

1-212-357-1744

ben.snider@

USEquityStrategist

Goldman,Sachs&Co.

1-212-902-5625

ryan.hammond@

Investorsshouldconsiderthisrepotasonlysinglefactorinmakingtheirinvestmentecision.ForRegACcetfcationandotherimpotantdisclosures,setheDisclosure

Appendix,orgoto/research/hedge.html.

2

2025USEquityStrategyOutlook

Backdrop:S&P500indexwillriseby11%to6500atyear-end2025Investmentrecommendations

1.Benchmark'Magnificent7'andownS&PMid-Cap4002.TheArtoftheDeal:OwnUSM&ACandidates

3.OwnstockswithSmall-andMedium-sizeBusinessExposure4.AIPhase3stocks:Al-enabledrevenuebeneficiaries

5.Sectors:Software&Services,Materials,Utilities

anPathofS&P500earningsandindexlevel

WeexpecttheS&P500willreach6500byyear-end2025

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch3

anGoldmanSachstop-downS&P500EPSforecasts

Ourforecastisinlinewithtop-downstrategists,belowbottom-upconsensus

S&P500ex.Fin,RE,UtilsSalesgrowth

ProfitMargin

Year/Yeargrowth

2023

3%

11.1%

(50)bp

GStop-down

Cons.BOTTOM-UP

2024E

6%

11.5%

35bp

2025E

5%

12.3%

78bp

2026E

4%

12.6%

35bp

2024E

5%

11.4%

31bp

2025E

6%

12.5%

111bp

2026E

6%

13.2%

70bp

S&P500adjustedEPS

Year/Yeargrowth

$223

1%

$241

8%

$268

11%

$288

7%

$242

9%

$274

13%

$308

12%

Cons.TOP-DOWN

2024E2025E2026E

$242

9%

$26811%

$288

7%

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch4

anEconomicgrowthandS&P500earningsgrowth

GSEconomicsforecasts2.5%realUSGDPgrowthin2025and2.3%in2026

AnnualSap500EPSgrowth

USeconomicgrowth

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch5

anUSequitiespriceanoptimisticgrowthenvironment

ReturnsofCyclicalsvs.Defensivesexcludingcommoditiesremainelevated

125

120

115

110

105

100

95

90

85

80

75

70

66

Indexedreturnof

Cyclicalsvs.Defensives

modities

64

62

(leftaxis)

60

58

56

54

52

50

48

46

ISMManufacturingIndex

(rightaxis)

44

42

40

2010

2026

2012201420162018202020222024

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch6

Goldman

Sachs

PathofS&P500valuation:P/Emultiple

WeexpecttheS&P500P/Ewilldeclineslightlyto21.5xbyyear-end2025

S&P500forward12mP/Emultiple

Current21.7x

YE25

21.5x

Actual

Modeled

30x28x26x24x22x20x18x16x14x12x10x8x6x

1985199019952000200520102015202020252030

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch7

anPathofS&P500valuation:Relativetointerestrates

Weexpecttherealyieldgapwillincreaseslightlyin2025

1200bp

1000bp

800bp

600bp

400bp

200bp

0bp

(200)bp

S&P500EPSyieldgapvs.real10-yearUSTreasury

Actual

GS

2025E:

280bp

Current:

250bp

Modeled

1985199019952000200520102015202020252030

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch8

Goldman

Sachs

PerformanceofMagnificent7vs.S&P493

Mag7accountforone-halfofthe57%riseinS&P500indexsinceendof2022

Dec-24

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch9

anMarketshareofTop7stocksinS&P500isnow32%Top7stocksincomprisearecordshareoftheindexmarketcapitalization

Source:Compustat,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch10

anOnly24%ofmutualfundsbeatingbenchmarkYTD

MostfundsareunderweightMag7positionsandarelaggingtheS&P500

%ofLarge-CapCoreMutualFunds

YTDtotalreturn(%)

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch11

anMag7outperformancevs.S&P493willnarrow

From63ppoutperformancein2023,to22ppin2024,toroughly7ppin2025

100pp

80pp

60pp

40pp

20pp

0pp

(20)pp

(40)pp

Magnificent7vs.S&P493relativereturn

63pp

49pp

22pp

7pp

25pp

16pp

8pp

Relative

return

impliedby

consensus

(29)pp

20222023

earnings

2018201920202021

20242025E

YTD

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch12

aoanEPSgrowthpremiumwillnarrowsharplyin2025Mag7premiumEPSgrowthwillcompressfrom30ppin2024to6ppin2025

40%

30%

20%

10%

0%

(10)%

35%33%Annualearningsgrowth

Magnificent7

18%

15%

12%

11%

S&P493

3%

(4)%

20232024E2025E2026E

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch13

anGapinearningsgrowthexpectedtoshrinkto4pp

Anarrowerearningsgrowthgapsuggestsanarrowerrelativereturngap

Relativereturn

40pp

RelativeNTMearningsgrowth

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch14

aoanPremiumvaluationforMag7stocksvs.S&P493

Magnificent7forwardP/Ecurrentlyequals30xvs.19xforS&P493

40x

36x

ForwardP/E

Magnificent7

32x

28x

30x

24x

20x

S&P493

19x

16x

12x

201420152016201720182019202020212022202320242025

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch15

anValuationsnearfairvalueforMag7andS&P500

Modeledvaluationsincorporatefundamentalsandarein-linewithactualP/Es

ActualP/E

ModeledP/E

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch16

anTradepolicyriskfavorstheS&P493

Magnificent7stocksaremoreexposedtoglobalgrowthrisksthanS&P493

60%

49%

50%

46%

ShareofsalesderivedfromoutsideUnitedStates

40%

28%

25%26%

30%

21%

20%

10%

0%

RUTMIDS&P493SPXNDXMag.7

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch17

anMid-capsarepositionedtobenefitfromUSgrowth

Lowervaluation:S&Pmid-cap400tradesatP/Eof16xvs.S&P493at19x

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch18

anWeforecast25%riseincompletedUSM&Ain2025

StrategicandsponsorM&Adealsgreaterthan$100millioninvalue

Source:Dealogic,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch19

anModeledUSM&Aactivity,1996-2025E

Modelisbasedoneconomicgrowth,CEOconfidence,andfinancialconditions

100%

80%

60%40%20% 0%(20)%

(40)%

(60)%

(80)%

1996

Yearlyearchangeinthenumber

ofcompletedUSM&Adeals

Modeled+25%

Realized

R2=0.64

2016202020242028

2000200420082012

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch20

aoanReturnsofGSRHACQNvsequal-weightS&P1500

USM&ACandidatesbasket(GSRHACQN)appearstounderpriceM&Aactivity

60%

40%

20%

0%

(20)%

(40)%

(60)%

2012

Changeinthe

numberofcompleted

USM&A

(yearlyear,left)

M&ACandidates(GSRHACQN)

Vs.equal-weightS&P1500

rolling12-monthreturn(right)

20142016201820202022

GS2025

forecast+25%

30pp

20pp

10pp

0pp

(10)pp

(20)pp

(30)pp

20242026

2028

Source:Dealogic,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch21

anUSM&ACandidatesbasket(GSRHACQN)hitrate

OurUSM&ACandidatesbasketvs.theS&P1500

Source:Dealogic,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch22

anGSRHACQNhasthepotentialforfurtherupside

GSRHACQNvs.medianS&P500stockvaluationpremium/(discount)

Source:Factset,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch23

aoanSmall&MediumBusinessexposure(GSRHSMBX)

PerformanceofstockswithelevatedrevenueexposuretoSMBhasincreased

200

190

180

320

300

280

260

240

220

200

180

160

140

120

100

SMBExposure

basket

(GSRHSMBX)

indexedreturn

)

170

160

150

Vs.equal-weight

(rSig&h)

140

130

120

110

100

80

90

2018201920202021

2026

2022202320242025

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch24

NFIBSmallbusinesssentimentsurgedduringthefirstTrumpadministration

anSmallbusinesssentimenthasincreasedasoflate

Source:NFIB,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch25

anBusinesssentimentbasedonpoliticalcontrolofD.C.

BusinesssentimentistypicallyhighestduringRepublicanadministrations

108

106

104

102

100

98

96

94

92

90

Businesssentimentbasedon

politicalcontrolofWashington,D.C.

■NFIBSmallBusinessOptimismIndex(leftaxis)

□CEOBus.ConfidenceSurvey(rightaxis)

UnifiedDivided

governmentgovernment

Democraticpresident

DividedUnified

governmentgovernment

Republicanpresident

66

64

62

60

58

56

54

52

50

Source:TheConferenceBoard,NFIB,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch26

anIssuessmallbusinessesreportasmostimportant

Inflation,laborcostandqualityremainahighproblemforsmallbusinesses

Inflation

Costoflabor

QualityoflaborInsurancecost/availabilityFinancial&interestratesPoorsales

TaxesCompetitionfromlargebiz

Govtrequirements

0%20%40%60%80%100%

Percentilerankvs.history

Source:NFIB,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch

aoanValuationofstockswithSMBexposurehavedeclined

ElectionresultsandoperatingenvironmentshouldboostlowSMBsentiment

90%

80%

70%

60%

50%

40%

30%

20%

SMBExposurebasket

forwardP/Epremiumvs.

equal-weightS&P500

NFIBSurvey:

Net%ofsmallbiz.

planningto

(rightaxis)

increasecapex

36%34%32%

30%28%26%24%22%20%18%16%

20192020202120222023202420252026

Source:FactSet,NFIB,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch28

Goldman

Sachs

PerformanceofourAIbasketsYTD

Phase3stockswithAl-enabledrevenueshaveoutperformed

recently

170

160

Indexedperformancevs.equal-weightS&P500

150

Infrastructure(GSCBAIP2)

140

130

120

Enabled

revenues

(GSCBAIP3)

110

Productivity

(GSTHLTAl)

100

90

Apr-2023

Oct-2024Jan-2025

Jul-2023Oct-2023Jan-2024Apr-2024Jul-2024

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch29

anThedriversofAIPhase2andPhase3returns

ReturnsofourAIPhase2(GSCBAIP3)andAIPhase3(GSCBAIP3)baskets

AIPhase2:InfrastructureAIPhase3:Enabledrevenues

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch30

Goldman

Sachs

Hyperscalercapexgrowthisexpectedtoslow

Capexgrowthwilldeceleratefrom50%in2024to22%in2025

70%

60%

50%

40%

30%

20%

10%

0%

(10)%

Hyperscalerannualcapexgrowth(MSFT,META,GOOGL,AMZN,ORCL)

50%

$231bn.

22%

$282bn.

11%

$313bn.

-2%

$154bn.

2023202420252026

Note:Basedonconsensusestimates.

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch31

Goldman

Sachs

Sensitivityofsectorstoratesandgrowth

Software&Servicesreturnsleastexposedtochangesingrowthandrates

Note:EconomicgrowthreflectsperformanceofCyclicalsvs.Defensivesandrealyieldsreflectsreal10-yearUSTyields.

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch32

aoanMaterialshavesharplylaggedinrecentweeks

GSCommoditiesexpectsGSCltoreturn9%inthenext6months

20%

80%

Materialsvs.S&P500

(equal-weight,6mreturn)

15%

60%

(6mre,IRIGHT)

10%

40%

5%

20%

0%

0%

-5%

-20%

-10%

-40%

-15%

2012

-60%2026

20222024

2014201620182020

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch33

anPerformanceofUtilitiesVS.otherDefensives

UtilitieshaveoutperformedConsumerStaplesandHealthCare

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch34

anConsensussectorEPSrevisionsYTD

UtilitiesisoneofthefewsectorstohavepositiveEPSrevisionsYTD

CommunicationServicesInformationTechnology

Utilities

Financials

S&P500

ConsumerDiscretionary

RealEstate

HealthCare

ConsumerStaples

Materials

Industrials

Energy

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch35

anValuationsofS&P500sectorsandindustrygroups

HealthCare,Staples,Materialstradeathistoricallylowrelativevaluations

MedianS&P500stock

Absolute

Premium/(Discount)toS&P500

NTMP/E

NTMP/E

20-yr%ilerank

HealthCareStaples

Materials

TelecomServicesEnergy

Media&Ent

DiscretionaryFinancials

TechHardwareSemis

Utilities

Software&ServicesIndustrials

17x17

1810141919141819183023

(12)%(8)(8)

(46)(25) 3(2)

(25)(6)(0)(4)

58

22

0%

2

20

21

27

28

35

43

52

54

58

75

99

Source:FactSet,GoldmanSachsGlobalInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch36

clanStockswithinour2025investmentstrategies

OverlapbetweenourUSPortfolioStrategyrecommendedinvestmentstrategies

AGIOALT

ARVNARWRAVPTBBIO

BIGCBL

BMRN

BPMC

BRZE

CGON

DAWN

DNLI

EA

ENFN

GERNHXL

INSM

IOVAIRTC

KLTRKNTKKOS

KRYSKTOsMDGL

MGYMLTXMLYSMRVIMTW

NBIX

NCNOOLMAOLO

ON

OPCHPRVAPSN

QTRXRCKT

RLAYRYTMSAIC

SNDX

SPT

SRPT

SWI

TAPTRIPTTWoTWLO

U

WOLFXENEZM

USM&ACandidates

(GSRHACQN)

AIPhase3(GSCBAIP3)

AAPLACN

ADBEADSKBOX

CARGCRM

CVLTDDOG

DT

GTLB

IT

MA

MDB

BASEWK

NOWNTNXQTWO

SNOwUBERYEXT

zs

ACVADOCNFTNTHUBSINTUMETANET

GRPNRNG

TRMB

AGCOAJG

ALGNARWAVT

BFAMBILL

BROBV

CTASCTVA

DBXDE

ELAN

EVCMFOURFVRR

GFLGPNHRI

HSICIDXXKVYO

MLMNATLNVSTPAYO

PCARPDCoPYCRRSG

SEMRSHOPSQ

TEX

TOST

TRU

UPWKURI

VMC

WCN

WEAVWM

WRBXMTRXRAYYELPZG

ZIPZTS

USSmallMedium

BusinessExposed

Companies

(GSRHSMBX)

Source:GoldmanSachsGlobaInvestmentResearch.AsofNovember15,2024.GlobalInvestmentResearch37

38

DisclosureAppendix

November19,2024

anDisclosureAppendix

RegAC

businessorclientrelationships.

we.DavdJ.Kostn,enSsiderandFyanHanmondherebyeritatalofhevewsexpPesseitisrepotacurateyretectourpersonalvens,wiehhavenotbenituencedbyconsdeatonsofhefims

Unlessotherwisestated,theindividualslistedonthecoverpageofthisreportareanalystsinGoldmanSachs'GloballnvestmentResearchdvision.

Disclosures

Basketdisclosure

Theabitytotradethebaskets)inthisreportwilldependuponmarketconditions,includingliquidityandborrowconstraintsatthetimeoftrade.

Regulatorydisclosures

DisclosuresrequiredbyUnitedStateslawsandregulations

maytradeasaprincipalindebtsecurities(orinrelatedderivatives)ofissuersdiscussedinthisreport.

tnsenci;ovlnshis;aloicomaniroiopipiddrectosoisirsourtesm,kgorcalstroorndiposor

housenodsfomowingsecurtsofanycompanyitheanaystsareaofcoerge.Analystcompensaton:AnaystsarpaidinpatasedonthepofaoliyofGodmanSachs,whichincludesivestment

Thefolowingareadionalreuredstosures:0wnershipandmaterialconfietsofnterstGoldmanSachspolcyprohbitsisanalysts,profssioalroporingtoanalystsandmempersofher

adwisorofanycompanyinthenaystsareaofcoerge.Non-US.Analys:NonUS.anaystsmaynotbesocatedpersonsofGodmanSachs&Co.LCanathereforemayiotbesubectoFINRARule

bankingrevenues.AnalystasofierordirectorGodmanSachspoleygeneralyprohitsisanaysts,personsreporintoanaystsarmembesofherhousehodsfiomseninasanofie,directoror

2241orFINRARule2242restrictionsoncommunicationswithsubjectcompany,publicappearancesandtradingsecuritiesheldbytheanalysts.

AdditionaldisclosuresrequiredunderthelawsandregulationsofjurisdictionsotherthantheUnitedStates

esach.andanyacesstot,isinendedonyfor"wholslefents"witinhemaningotheAustalanCorpoatonsAat,unesoteniseagreabyGodmanSseislnproucngrseachreportsmembers

iflielgndoststirdeiekqiirsetbnysthsisadtttnisidecfti,xiphtteknitngaAt59mICatdhailrttnptdeSbtlksinsecglslabokdiabnsAisAtyllTtdhaid

costsofsuchsteustsormetingsmayemetinpantorinwholebyheissersconenedifGodmanSsecnsAustalaconsdersitisaproprateandreasonableinhespecficrcumstnceselatngtotheste

ofiobalnvestmentResarchofGodmanSactsAustalamayatendstevstsandotermetingsostedbyhecomeanesandotherentoswhicharehesuietoftsresarchrepots.Insomeistancsthe

oectvesfnancalstuatonorneds.Adientshouldbeforeactngonanysuchadvce,cpnsertheapopratnsoftheadvcehayngroardtothedlersownobetvesfnancalstuatonandneds.AcoY

ustormetingToteextenthathecontentsoftisdocumentcotansanyfnancalpocductadvice,tisgenerladiceonyandhasbenpreparedbyGodmanSsecnswthoutkingintoacontclenrts

ofcertanGoldmnanSachsAustralaandNewzealanddisclsureofinterestsandacopyofGoldmanSachs'AustralanSelSideResearchIndependencePolcyStatementarevilableat.

https/~/disclosureslaustralianewzealandlindexhtml.Brazil:DisclosureinformationinrelationtoCVMResolutionn.20isavailableat

20.isthefistautrornamedatebegimngofhisrepot.unessndteatedotherwiseateendofhetext.Canada:Thisiniomatonisbeingrovidectoyouforintomatopurosesonyandisnotandunder

htos/asconortewidetalraloifndekhtmlLWhereaplcabe,theBrazlregstredanalstpimaivresponsbeforthecotentoftisresachreponasdefindiArtide20ofCVMResoluionn

isnotregstedasadealernanyiurgdctonincanadaunderapleableanadanseuiesawsandgeneralyisnotpemitetotadenCanadanscoitosndmaybeprohitedfomselingcetainsecurte

noicumstanceshouldbeconstedas,anadvetisementofeingorsolctatonbyGodmanSachs&Cco.LCforpurchasesofsecuitosnCanadatotadeinanyCanadnsecurty.GodmanSachs&Co.LLC

andpcoducsincetanjursdctonsinCanada.fyouwishtotadeinanycanadansecurtesorotherproductsinCanadapeasecontatodmanSsensCanadalnc.anaflateofTheGodmanSsctsGroupIne.

oranoteregstereCanadandealetHongKong:FurtherinfomatonontheseuritesfcoveredcomperiesreferedtointisresachmeybeobtenedonequestiomGodmanSachs(AsDLCInda;

FurtherinomatononthesubectcompanyorcomperiesreferedtointisreseachmaybeobtanedtomGodmanSachslndaSecurtesPiateLimite.ReseacAayst-SEIRegistationNumber

NH000493951ARatonalHouse.AppasahebNatheNarg,Pabhadev,Mumbai40025Inda.CorporateldentyNumberU74140NH2006FC160634,Phone+9122616900Fx+9122616900

tisreseachreport.IvestmentinsecuftesmaretrsubiectomarketriksReadlterelatedocumentscaretulyeforeinvestingRegistationgrantedbySEBIandcerfeatonfomNSMinnoway

Godmansensmayenefcalyon1%ormoreofhesecuitissuchtemisdefnoeindause2th)thelndanscotfosContacts(egulatonAt1950ofhesliectcompgnyorcompeniesreferedtoin

OfierAilaiputITet+9122616900Emalanlm.aptescom.Japan:Sebelw.Kora:Thisresach.andanyaestoitisintendedonyforrofessonalivestrs"witinthemeaningofthe

guarantepefomanceofteitemedayorprovdeanyasuanceofetunstoinvestors.GodmanSachstindelSsecurtesPivateLimitelivestorGrievanceEmalindaclentsupotescom.Ccomplenc

FinancalSeresindCcoptaNaretsAatnessotenusesredbyodnansecrs.FurteinfomationonthesubiectconpanyorcomenesfernadtointisrasgarchmgybeobtainedfronGdmansens

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NewZealand.This

GlobalInvestmentResearch39

lanDisclosureAppendix

Zedndistosureofiterestsisavalabeathtos/N~~cldmans