(Feb 26): Stock markets have room to extend gains beyond record highs if the economic outlook remains upbeat, and if investors pour money into recent laggards, according to Goldman Sachs Group Inc strategists.

The S&P 500’s run to an all-time peak has left investor positioning “extremely” concentrated in the so-called Magnificent Seven, the team led by Cecilia Mariotti wrote in a note.

While that does create the risk of a pullback, there’s also “space for bullish sentiment and positioning to be further supported, especially if we start seeing a more meaningful rotation out of cash and into risky assets and laggards within equities”, the strategists wrote.

US and European stocks have hit record highs this year, as investors bet that central banks would start cutting interest rates even though the economy remains resilient. Most of those gains have been driven by technology behemoths. In the US, the performance of the benchmark S&P 500 is hovering near 2009-highs relative to the equal-weighted index, which dilutes the impact of the tech megacaps.

Other strategists including Michael Hartnett at Bank of America Corp also see more support for equity markets from the buzz around artificial intelligence and confidence about economic growth. JPMorgan Chase & Co’s Marko Kolanovic is an outlier, warning about the risks to stocks from 1970s-style stagflation.

Overall, strategists tracked by Bloomberg expect the S&P 500 to end the year around 4,897 points on average — implying a drop of about 4% from the current level.