Wall Street’s recent losses may not spell trouble for long, with Goldman Sachs seeing room for a fresh rally in the coming months. The brokerage expects the benchmark S&P 500 to reach 8,700 points over the next 12 months, as lower stock valuations could help markets gain ground despite a slowdown in corporate earnings growth.The target implies an upside of more than 14% from the index’s last closing level of 7,592.40 points. According to Goldman Sachs, the recent market correction has made stocks more attractively valued, creating room for equities to deliver positive returns.The forecast follows a sharp selloff in shares of some of the biggest technology companies. The decline came after the Democratic victory in last week’s US midterm elections fuelled concerns about a possible slowdown in data centre expansion.Goldman Sachs, however, expects the market to keep moving higher despite the possibility of slower growth. The brokerage estimates that earnings growth across global markets could at least halve in 2027. In the US, the pace could drop to 11% from 36%, possibly as hyperscalers ease the pace of their capital expenditure growth.This could put pressure on earnings across the AI infrastructure sector, where spending has been a key factor. But Goldman Sachs believes lower valuations, continued economic and earnings growth, softer bond yields and easing inflation could help equities stay in positive territory next year.The S&P 500 is currently trading at around 18.5 times its 12-month forward earnings, considerably lower than its recent highs of more than 23 times, the brokerage said.Goldman Sachs has retained its ‘overweight’ rating on US and Japanese equities, indicating a preference for these markets. It has maintained a ‘neutral’ stance on Asia and emerging markets, while keeping Europe at ‘underweight’.“From here, we expect equities to generate positive returns, albeit with higher volatility than in recent years,” Goldman Sachs said.Meanwhile, the AI trade has faced another round of uncertainty amid developments at chipmaker Nvidia. The company’s long-time CEO Jensen Huang quit following reports of alleged extramarital affairs, adding to concerns surrounding the AI sector.Nvidia’s valuation has also fallen sharply. The stock is trading at around 11.7 times its 12-month forward earnings estimates, its lowest level since February 2012, according to data compiled by LSEG.