Goldman Sachs' Global Stock Market Outlook for 2026: A Broader Bull Market, a Wider Range of AI Beneficiaries.

Goldman Sachs said that the global stock market will continue its bull market trend in 2026, but the index return rate will be lower than in 2025, and the market will show a more diversified characteristic. The AI dividend will spread from core technology giants to a wider range of fields. According to Wind Trading Desk news on December 20, Goldman Sachs stated in its latest 2026 global stock strategy outlook report that with the continued economic growth and further moderate easing support from the Federal Reserve, there is still room for the stock market to rise. Goldman Sachs defines the current market as the "optimistic" stage in the cycle, and expects this stage to continue in 2026. With market capitalization weighting, the global stock market price return rate in 2026 is expected to reach 13%, with a total return rate of 15% including dividends. Most of the return will be driven by profit growth rather than valuation expansion. The report stated that the global stock market in 2025 has shown a clear trend of broadening, with US stocks lagging behind other major markets for the first time. The dollar total return of Europe, China, and Asian markets is almost twice that of the US, and this trend is expected to strengthen in 2026, with non-US markets outperforming US stocks and breaking the previous highly concentrated market pattern. The bank emphasized that the current dominance of the technology sector is not solely driven by AI, but began after the financial crisis, supported by sustained profit growth, and current valuations have not reached historical bubble levels. In 2026, the AI dividend will further spread, benefiting a wider range of industries and companies, especially those that can use AI and related technologies to improve profitability and productivity. Economic expansion and policy easing support the continuation of the bull market Goldman Sachs said that the global economy will maintain a comprehensive expansion trend in 2026, and the Federal Reserve is expected to further moderately ease monetary policy, providing solid support for the stock market in this macro environment. In terms of earnings expectations, the bank expects that, calculated by regional market capitalization weighting, the global stock market's US dollar price return rate in 2026 will be 13%, with a total return rate including dividends reaching 15%, and the majority of earnings being driven by profit growth. Goldman Sachs believes that the current market is in the "optimistic stage" of the stock market cycle, which is characterized by increased investor confidence, and valuations are likely to continue to rise, bringing upside risks to core expectations and potentially driving the market to achieve better-than-expected performance. The bank divides the stock market cycle into four stages: the "desperate" stage (bear market), the "hope" stage (valuation-driven rebound), the "growth" stage (the longest stage driven by profit), and the "optimistic" stage (increased investor confidence, with valuations rising again). Using the bear market triggered by the COVID-19 pandemic as the starting point of the current cycle, Goldman Sachs observed a fairly typical cycle evolution: 2025 was a typical example of the early optimistic stage, with many markets (especially non-US markets with lower valuations) showing simultaneous increases in valuations and profits. The report also pointed out that historical data shows that in the absence of a recession, even when valuations are high, it is difficult for the stock market to experience a significant pullback or bear market. The forward price-to-earnings ratio of the US reached 22.3 times, even reaching 20.2 times when excluding large technology stocks. Valuations in Japan, Europe, and emerging markets are similarly close to or at historical highs. In the context of high valuations, Goldman Sachs expects the returns in 2026 to be driven more by fundamental profit growth rather than valuation expansion. The bank's earnings model shows that: All regions will achieve sustained positive growth in 2026, with growth rates exceeding those of 2025. The S&P 500 is expected to grow by 12%, STOXX 600 by 5%, TOPIX by 9%, and Asia-Pacific (excluding Japan) by 16%. Bull market broadens, non-US and non-tech sectors rise The report states that the global stock market in 2025 has shown a clear trend of broadening, which will continue to strengthen in 2026, breaking the previous highly concentrated market pattern. Goldman Sachs stated that in 2025, for the first time in nearly fifteen years, US stocks performed poorly, with the total return rates (dollar-based) of major markets in Europe, China, and Asia almost double that of US stocks. Specific markets such as Italy (54%), Spain (73%), and South Korea (71%) performed particularly well, with emerging markets beginning to rise significantly due to the acceleration of profit growth, falling US interest rates, and a weakening US dollar. Goldman Sachs predicts that in 2026, US stocks will still slightly lag behind other global markets, with the total return rates in MSCI Asia-Pacific (excluding Japan) index and MSCI Emerging Markets index expected to reach 18%, far exceeding the expected 15% of the S&P 500 index. In terms of style, the US market is still dominated by growth stocks, but in non-US markets, value stocks are performing better, breaking the trend of growth stocks dominating the market for the past decade. Goldman Sachs stated that traditional value sectors such as finance and mining have successfully transitioned from "value traps" to "value creators", and the expansion of technology capital expenditure has also brought new growth opportunities to infrastructure-related areas in the "old economy". In terms of industries, the trend of broadening returns is also apparent. In 2025, the technology and finance sectors (belonging to the growth and value sectors respectively) led the industries, while real estate and healthcare (belonging to the cyclical and defensive sectors respectively) lagged behind, reflecting the emergence of high-quality targets in both growth and value sectors. In the S&P 500 index, the profit contribution ratio of the top seven tech giants will decrease from 50% in 2025 to 46% in 2026, while the profit growth of the remaining 493 companies will increase from 7% to 9%, further reducing industry concentration. AI dividend: Diffusion from core giants to wider beneficiaries In 2026, the AI dividend will further spread, benefiting a wider range of industries and companies beyond the core technology giants. Goldman Sachs emphasized that the current frenzy in tech stocks is not a bubble like before. Compared to the dot-com bubble in 2000, today's tech giants have stronger balance sheets and real cash flow. However, the market volatility triggered by DeepSeek in early 2025 warned investors that AI competition is intensifying and cost structures are changing. Goldman Sachs observed that the stock correlation between the five large AI hyperscalers has dropped from 80% to 20%. This indicates that investors are no longer blindly buying the entire sector, and are starting to be selective about who the ultimate winners will be. The bank believes that this differentiation means that even within the technology sector, diversifying portfolio allocations can lead to better risk-adjusted returns. The report pointed out that in 2026, investors will increasingly focus on beneficiaries of AI outside the tech industry, especially those companies that can use AI and related technologies to improve profitability and productivity. The spillover effect of technology capital expenditure will continue to show, driving growth in industrial, materials, financial, and other non-tech sectors, forming a cross-industry growth wave of "AI + industry" and further broadening the coverage of the bull market.