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

Goldman Sachs says that the global stock market will continue its bull run in 2026, but index returns will be lower than in 2025, with the market showing more widespread diversification. The AI dividend is spreading from core technology giants to broader sectors.

On December 20, according to Wind Trading Desk, Goldman Sachs stated in its newly released 2026 global equity strategy outlook report that, supported by continued economic growth and further moderate easing from the Federal Reserve, the stock market still has room to rise.

Goldman Sachs defines the current market as the "optimistic" stage of the cycle, and expects this phase to extend into 2026. Calculated by market-cap weighting, the global equity price return in 2026 is projected to reach 13%, with a total return including dividends of 15%. Most of the returns will be driven by earnings growth rather than valuation expansion.

The report states that the global stock market in 2025 has shown a clear broadening trend, with U.S. stocks underperforming other major markets for the first time. The total returns in dollars for European, Chinese, and Asian markets are almost double those of the U.S., and this trend is expected to further strengthen in 2026, with non-U.S. markets outperforming U.S. stocks, breaking the previous highly concentrated market pattern.

The bank emphasized that the dominance of the tech sector is not solely driven by AI, but started after the financial crisis, supported by sustained earnings growth, and current valuations have not reached historical bubble levels. In 2026, the AI dividend will further spread, with beneficiaries expanding from core tech giants to a wider range of industries and companies, especially those able to leverage AI and related technologies to boost margins and productivity.

Economic Expansion and Policy Easing Support Bull Market Continuation

Goldman Sachs says that the global economy will maintain comprehensive expansion in 2026, and the Federal Reserve is expected to further moderately ease monetary policy, providing solid support for the stock market.

In terms of return expectations, the bank estimates that, weighted by regional market cap, the global equity price return in USD will be 13% in 2026, with a dividend-inclusive return of 15%, and most gains driven by earnings growth.

Goldman Sachs believes that the current market is in the “optimistic phase” of the equity cycle, characterized by rising investor confidence and usually further rising valuations, presenting upside risks to core forecasts and room for outperformance.

The bank divides the equity cycle into four stages: the "despair" stage (bear market), "hope" stage (valuation-driven rebound), "growth" stage (the longest, driven by earnings), and "optimistic" stage (rising investor confidence and renewed valuation expansion).

Taking the bear market triggered by COVID-19 as the starting point of the current cycle, Goldman has observed a typical cycle evolution: 2025 is a classic example of the early optimistic stage, with many stock markets (especially those outside the U.S. with lower valuations) experiencing both rising valuations and earnings growth.

Meanwhile, the report points out that historical data shows that, absent a recession, even with high valuations, the stock market rarely sees significant corrections or bear markets.

The U.S. 12-month forward P/E has reached 22.3 times, and even after excluding big tech stocks, it is 20.2 times. Valuations in Japan, Europe, and emerging markets are also near or at historical highs.

Against this high valuation backdrop, Goldman expects 2026 returns to be driven more by underlying earnings growth rather than valuation expansion. The bank’s earnings model shows:

All regions will see continued positive growth in 2026, at a pace outpacing 2025. S&P 500 is expected to see 12% earnings growth; STOXX 600, 5%; Japan’s TOPIX, 9%; Asia-Pacific (ex-Japan), 16%.

Bull Market Broadens, the Rise of Non-U.S. and Non-Tech Sectors

The report notes a clear broadening trend in the global stock market in 2025, which will further strengthen in 2026, breaking the previously highly concentrated market landscape.

Goldman notes that for the first time in nearly fifteen years, U.S. stocks underperformed in 2025, with total returns (USD) in major markets like Europe, China, and Asia nearly double those of U.S. stocks.

Select markets such as Italy (54%), Spain (73%), and South Korea (71%) stood out, while emerging markets began to surge as earnings growth accelerated, U.S. interest rates fell, and the dollar weakened.

Goldman forecasts that U.S. stocks will continue to slightly underperform other global markets in 2026, with total dollar returns for the MSCI Asia-Pacific (ex-Japan) and MSCI Emerging Markets indexes both expected to reach 18%, far outperforming the S&P 500’s 15%.

In terms of style, growth stocks still dominate the U.S. market, but in non-U.S. markets, value stocks perform better, reversing the past decade’s growth stock domination.

Goldman states that traditional value sectors such as finance and mining have successfully transformed from “value traps” into “value creators,” and the expansion of tech capex has also brought new growth opportunities to infrastructure-related areas in the “old economy.”

For sectors, the trend of expanding returns is also clear. In 2025, technology and finance (growth and value sectors respectively) were leaders, while real estate and healthcare (cyclical and defensive sectors respectively) lagged, showing that quality stocks stand out within both growth and value sectors.

In the S&P 500, the profit contribution of the top seven tech firms will drop from 50% in 2025 to 46% in 2026, while the profit growth rate of the other 493 companies will rise from 7% to 9%, with industry concentration declining further.

AI Dividend: Spreading from Core Giants to Wider Beneficiaries

In 2026, the AI dividend will further spread, with beneficiaries expanding from core tech giants to broader industries and companies.

Goldman emphasizes that the current tech stock boom is not a pre-burst bubble. Compared to the internet bubble era in 2000, today’s tech giants have stronger balance sheets and real cash flow.

However, the market volatility triggered by DeepSeek in early 2025 served as a warning to investors: AI competition is intensifying and cost structures are changing.

Goldman observes that the stock correlation among the five largest AI hyperscalers has plunged from 80% to 20%, signaling that investors are no longer blindly buying the whole sector, but starting to pick out the ultimate winners.

Goldman believes this divergence means that even within tech, diversified allocation can bring better risk-adjusted returns.

The report notes that in 2026, investors will increasingly focus on AI beneficiaries outside the tech sector, especially companies that can use AI and related technologies to improve margins and productivity.

The spillover effect of tech capital expenditure will continue, driving growth in industrials, materials, finance, and other non-tech sectors, leading to a wave of "AI+industry" cross-sectoral growth, further broadening the bull market’s sector coverage.

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The above content is from Wind Trading Desk.

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