Goldman Sachs 2026 Global Stock Market Outlook: Broader Bull Market, Broader AI Beneficiaries

Goldman Sachs stated that global stock markets will continue their bull market trend in 2026, but index returns will be lower than those in 2025, and the market will exhibit more extensive diversification characteristics. The dividends of AI will spread from core tech giants to a broader range of sectors.

On December 20, according to information from Zhuifeng Trading Desk, Goldman Sachs said in its newly released 2026 Global Equity Strategy Outlook Report that supported by sustained economic growth and further moderate easing by the Federal Reserve, there is still room for stock markets to rise.

Goldman Sachs defines the current market as the "optimism" phase of the cycle and expects this phase to continue into 2026. Calculated by market capitalization weighting, the price return of global stock markets in 2026 will reach 13%, with a total return of 15% including dividends. Most of the returns will be driven by earnings growth rather than valuation expansion.

The report mentioned that global stock markets have shown a clear broadening trend in 2025, with U.S. stocks underperforming other major markets for the first time. The total U.S. dollar returns of European, Chinese, and Asian markets were nearly twice those of the U.S. It is expected that this trend will continue to strengthen in 2026, with non-U.S. markets outperforming U.S. stocks, breaking the previously highly concentrated market pattern.

The bank emphasized that the current dominant position of the technology sector is not driven by AI alone, but started after the financial crisis, supported by sustained earnings growth, and current valuations have not reached historical bubble levels. In 2026, the dividends of AI will further spread, benefiting a wider range of industries and enterprises beyond core tech giants, especially those that can leverage AI and related technologies to improve profit margins and productivity.

### Economic Expansion and Policy Easing Underpin the Continuation of the Bull Market

Goldman Sachs said that the global economy will maintain a comprehensive expansionary trend in 2026, and the Federal Reserve is expected to further moderately ease its monetary policy. This macroeconomic environment provides solid support for stock markets.

In terms of earnings expectations, the bank predicts that, calculated by regional market capitalization weighting, the U.S. dollar-denominated price return of global stock markets in 2026 will be 13%, with a total return of 15% including dividends, and most of the gains will be driven by earnings growth.

Goldman Sachs believes that the current market is in the "optimism phase" of the stock market cycle. A typical feature of this phase is rising investor confidence, and valuations tend to rise further, bringing upside risks to core expectations and expected to drive the market to achieve better-than-expected performance.

The bank divides the stock market cycle into four phases: the "despair" phase (bear market), the "hope" phase (valuation-driven rebound), the "growth" phase (the longest phase driven by earnings), and the "optimism" phase (rising investor confidence and another round of valuation increases).

Taking the bear market triggered by the COVID-19 pandemic as the starting point of the current cycle, Goldman Sachs observed a quite typical cycle evolution: 2025 is a classic example of the early optimism phase, with rising valuations and earnings growth coexisting in many stock markets, especially non-U.S. markets with lower valuations.

At the same time, the report points out that historical data shows that in the absence of a recession, even if valuations are at high levels, it is difficult for stock markets to experience sharp corrections or bear markets.

The U.S. 12-month forward price-to-earnings ratio has reached 22.3 times, and even excluding large-cap tech stocks, it still stands at 20.2 times. Valuations in Japan, Europe, and emerging markets are also close to or at historical highs.

Against the backdrop of high valuations, Goldman Sachs expects that returns in 2026 will be driven more by fundamental earnings growth rather than valuation expansion. The bank's earnings model shows that:

Sustained positive growth will be achieved across all regions in 2026, with growth rates exceeding those in 2025. The S&P 500 is expected to see 12% earnings growth, the STOXX 600 5%, Japan's TOPIX 9%, and Asia-Pacific (excluding Japan) 16%.

### Bull Market Broadens, with Non-U.S. and Non-Tech Sectors Rising

The report states that global stock markets have shown a clear broadening trend in 2025, which will continue to strengthen in 2026, breaking the previously highly concentrated market pattern.

Goldman Sachs said that 2025 saw U.S. stocks underperform for the first time in nearly 15 years, with the total U.S. dollar returns of major markets such as Europe, China, and Asia nearly twice those of U.S. stocks.

Specific markets such as Italy (54%), Spain (73%), and South Korea (71%) performed particularly prominently. Benefiting from the dual positive factors of accelerating earnings growth, falling U.S. interest rates, and a weaker U.S. dollar, emerging markets began to rise significantly.

Goldman Sachs predicts that U.S. stocks will still slightly underperform other global markets in 2026. The total U.S. dollar-denominated returns of the MSCI Asia-Pacific (excluding Japan) Index and the MSCI Emerging Markets Index are both expected to reach 18%, far exceeding the S&P 500's expected 15%.

In terms of investment style, growth stocks will still dominate the U.S. market, but in non-U.S. markets, value stocks will perform better, breaking the pattern where growth stocks dominated the past decade.

Goldman Sachs said that traditional value sectors such as finance and mining have successfully transformed from "value traps" to "value creators", and the expansion of tech capital expenditure has also brought new growth opportunities to infrastructure-related fields in the "old economy".

The trend of earnings broadening is also evident across sectors. In 2025, technology and finance (belonging to growth and value sectors respectively) became the leading sectors, while real estate and healthcare (belonging to cyclical and defensive sectors respectively) lagged behind, reflecting that high-quality targets have stood out within both growth and value sectors.

In the S&P 500 Index, the earnings contribution ratio of the top seven tech giants will drop from 50% in 2025 to 46% in 2026, and the earnings growth rate of the remaining 493 companies will increase from 7% to 9%, indicating a further decline in industry concentration.

### AI Dividends: Spreading from Core Giants to Broad Beneficiaries

In 2026, the dividends of AI will further spread, extending from core tech giants to a wider range of industries and enterprises.

Goldman Sachs emphasized that the current tech stock frenzy is not a bubble before bursting. Compared with the dot-com bubble period in 2000, today's tech giants have stronger balance sheets and solid cash flows.

However, the market volatility triggered by DeepSeek in early 2025 has warned investors that AI competition is intensifying and cost structures are changing.

Goldman Sachs observed that the stock correlation among the five major AI hyperscalers has plummeted from 80% to 20%. This indicates that investors are no longer blindly buying the entire sector, but have started to be selective about who the ultimate winners will be.

Goldman Sachs believes that this differentiation means that even within the technology sector, diversified allocation can bring better risk-adjusted returns.

The report points out that in 2026, investors will pay increasing attention to AI beneficiaries outside the technology industry, especially those enterprises that can use AI and related technologies to improve profit margins and productivity.

The spillover effect of tech capital expenditure will continue to emerge, driving growth in related enterprises in non-tech sectors such as industry, materials, and finance, forming a cross-border growth wave of "AI + industries" and further broadening the industry coverage of the bull market.

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The above exciting content is from Zhuifeng Trading Desk.

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