(Reuters) - Goldman Sachs has raised its 2024 year-end target for the S&P 500 Index to 5,600 from 5,200 earlier, citing strong earnings growth by five mega-cap U.S. tech stocks and a higher fair value price-to-earnings ratio multiple.

Microsoft ( MSFT ), Nvidia ( NVDA ), Google, Amazon.com ( AMZN ), and Meta Platforms ( META ) have collectively surged by 45% and now comprise 25% of the S&P 500 equity cap, the brokerage said in a note after markets closed on Friday.

"The drivers of the rally include upward revisions to consensus 2024 earnings estimates for these same tech companies, and valuation expansion stemming from increased investor enthusiasm about artificial intelligence (AI)."

The upgraded target reflects an upside of about 3.1% to the index's last close of 5,431.60.

The brokerage expects roughly unchanged real yields by the year-end and strong earnings growth to support a 15x P/E for the equal-weight S&P 500 Index.

"The (U.S.) election remains a key risk to the S&P 500 level and falls between our 3-month and year-end forecast horizons," said analysts at Goldman Sachs.

The United States will hold its next presidential election in November this year.

The brokerage added that index volatility increases before the election during election years, but following the election, volatility typically subsides and the S&P 500 index rebounds to an even higher level.