President-elect Donald Trump's proposed tax cuts could boost S&P 500 earnings by more than 20%, Goldman Sachs said.

Strategists at the investment bank argued that S&P 500 earnings per share were on track to rise by about 20% over the next two years. Goldman's forecast for full-year 2024 S&P 500 EPS is $241, followed by an 11% increase in 2025 and a 7% increase the following year, to $288 a share.

But the investment bank said in a note on Friday that those targets could be surpassed if Trump slashes taxes for corporations , adding that the latest election results had increased the upside potential of its forecast.

"Tax reform is an upside risk," the firm said. "President-elect Trump has campaigned on cutting the statutory domestic corporate tax rate to 15% from its current 21%. We estimate that each 1 percentage point reduction in the statutory domestic tax rate would boost S&P 500 EPS by slightly less than 1%, all else equal." A move to loosen regulation in the financial sector could bring additional earnings.

Stocks rallied sharply on Wednesday after Trump secured his second term in office. Bank of America said that traders poured $20 billion into US stocks, marking the largest single-day stock-purchasing boom in five months, and that weekly flows to financial funds hit $2.9 billion, the largest single-day inflow on record.

Trump's plans to levy hefty tariffs , though, is a risk to corporate earnings, Goldman said. Its strategists estimated that each 5-percentage-point increase in the effective US tariff rate could reduce S&P 500 EPS growth by as much as 2%.

The firm pegged the odds that Trump will follow through with his 10%-to-20% blanket tariff on US imports at 40%.

"During the 2018-2019 trade conflict, companies were generally able to pass the costs of tariffs through to customers," strategists wrote, referring to Trump's trade war with China in his first term. "However, even if that dynamic were repeated, tariffs could potentially reduce earnings via weaker consumer spending, retaliatory tariffs on US exports, and increased uncertainty."

Economists have described Trump's economic plan as inflationary and said his policies, including his tariff plan, are likely to send interest rates higher .