Goldman Sachs 2026 Global Equity Outlook: A Broader Bull Market And Wider AI Beneficiaries

Goldman Sachs projects that global equity markets will remain in a bull phase through 2026, albeit with index returns that are expected to be lower than those recorded in 2025, and with gains distributed more broadly across regions and sectors. The firm anticipates that the economic expansion and further moderate easing by the Federal Reserve will underpin continued upside for equities, while the benefits of artificial intelligence will extend beyond the largest technology firms to a wider set of industries and companies.

In its 2026 Global Equity Strategy Outlook, Goldman Sachs characterizes the market as occupying the “optimism” stage of the cycle and expects this phase to persist into 2026. On a market‑capitalization weighted basis, the bank forecasts a price return of 13% for global equities in U.S. dollar terms, rising to a 15% total return when dividends are included. The report emphasizes that the bulk of expected returns will be driven by earnings growth rather than further valuation expansion.

Goldman Sachs notes that 2025 already exhibited a meaningful broadening of market leadership, with U.S. equities underperforming other major markets for the first time in nearly fifteen years. Total‑return performance in Europe, China and other Asian markets in dollar terms was roughly double that of the United States, and the bank expects this pattern of non‑U.S. outperformance to strengthen in 2026, reducing the prior concentration of gains. The firm stresses that the technology sector’s recent prominence is not solely an AI story but reflects a longer period of earnings growth since the global financial crisis, and current valuations do not resemble historical bubble extremes. Over the coming year, AI‑related gains are expected to diffuse into companies across multiple sectors that can deploy AI to raise productivity and margins.

Goldman Sachs frames the equity cycle in four stages and identifies the present phase as one in which investor confidence is rising and valuations can expand, creating upside risk to consensus outcomes. Using the pandemic‑induced bear market as the cycle’s starting point, the bank observes that 2025 exemplified an early optimism phase in which valuation expansion and earnings growth occurred simultaneously in many markets, particularly those outside the United States. Historical evidence cited in the report suggests that, absent a recession, elevated valuations alone have not typically precipitated severe market drawdowns.

Valuation levels are elevated across regions: the U.S. forward 12‑month price‑to‑earnings ratio stands at 22.3 times, or 20.2 times excluding the largest technology names, while valuations in Japan, Europe and emerging markets are also near or at historical highs. Against this backdrop, Goldman Sachs’ earnings model projects positive earnings growth across all regions in 2026, with increases exceeding 2025 levels. The bank’s regional forecasts include a 12% earnings rise for the S&P 500, 5% for the STOXX 600, 9% for TOPIX and 16% for Asia‑Pacific ex‑Japan.

The report highlights a continued broadening of the bull market in 2026, with non‑U.S. markets and non‑technology sectors gaining prominence. Specific markets that outperformed in 2025—such as Italy, Spain and South Korea—are cited as examples of the widening leadership. Goldman Sachs expects the MSCI Asia‑Pacific ex‑Japan and MSCI Emerging Markets indices to deliver stronger dollar‑denominated total returns than the S&P 500 in 2026, reflecting faster earnings growth, lower U.S. interest rates and a weaker dollar. Style dynamics are likely to diverge across regions: growth leadership may persist in the United States, while value stocks could outperform in many non‑U.S. markets. Traditional value sectors, including financials and mining, have transitioned from “value traps” to genuine value creators, and increased technology capital expenditure is creating new opportunities within infrastructure‑related segments of the old economy. The bank also expects industry concentration within major indices to decline, with the earnings contribution of the largest technology firms easing and broader cohorts of companies contributing more to aggregate profit growth.

On the AI front, Goldman Sachs anticipates that the technology‑driven gains observed to date will spread more widely in 2026. The firm argues that current enthusiasm for technology does not mirror the dot‑com bubble, noting that today’s leading tech companies possess stronger balance sheets and more robust cash flows. Nevertheless, market volatility earlier in 2025 underscored intensifying competition and shifting cost structures within AI. Correlations among the largest AI hyperscalers have fallen sharply, indicating that investors are becoming more selective about winners within the sector. This differentiation supports the case for diversified exposure even within technology. Importantly, Goldman Sachs expects AI’s spillover effects to accelerate growth in industrials, materials, financials and other non‑tech sectors, creating cross‑sector “AI + industry” growth dynamics that further broaden the bull market’s reach.