Investors have been focusing on artificial intelligence since the beginning of this year. (AI) and the large tech giants driving the stock market rally. But as the year draws to a close, Goldman Sachs... He indicated that greater opportunities next year may come from other sectors.
In a recent report, analysts at the bank wrote: "From an industry perspective, we expect accelerated economic growth in 2026 to most significantly drive earnings per share growth in cyclical sectors, including industrials, materials, and consumer discretionary." They added that Goldman Sachs ' overall forecast also takes into account the easing of tariff pressures.
Goldman Sachs analysts predict that earnings per share (EPS) growth for real estate companies will rise from 5% this year to 15% next year, while EPS growth for consumer discretionary companies is expected to increase from 3% to 7%. Industrial stocks are also expected to rebound sharply, with EPS growth projected to accelerate from 4% to 15%.
In contrast, Goldman Sachs expects the earnings growth of information technology companies to slow from 26% in 2025 to 24% in 2026.
Goldman Sachs released its latest report as investors continued to debate whether the stock market was sliding into a speculative bubble fueled by artificial intelligence enthusiasm. (Standard & Poor's ) The S&P 500 has risen 16% this year, with the "Big Seven" tech companies accounting for about a third of its weighting. The bank also warned last month that the market may have already priced in most of the potential gains from artificial intelligence .
Coincidentally, Bank of America ... Savita Subramanian, head of U.S. equities and quantitative strategy at Bank of America, also believes that AI-related stocks will face a "downturn" next year, with investors continuing to sell off.
Her biggest concern is hyperscale data centers. Operators are leveraging to expand capacity. Their research shows that among all balance sheet metrics, leverage exerts the greatest downward pressure on valuations. This is because leverage increases the risk of earnings volatility. In the AI field, this means that the returns from hyperscale data center operators' spending may not materialize in a timely manner, thus failing to meet investor demand.
“We may have to wait a year to see the returns. That’s what’s called the ‘gap period’,” she said.
Subramanian also stated that artificial intelligence stocks are expensive and risky, and she believes that investors will shift from "buying AI stocks every day" to buying other sectors, thereby broadening the market landscape.
She stated, "Is there a bubble in artificial intelligence? No. Will it maintain its absolute dominance in 2026? No."
It's worth noting that the signs of the shift mentioned by Goldman Sachs and Bank of America have already appeared in market action. In another report released last Friday, Goldman Sachs noted that cyclical stocks are "quietly" surging, having outperformed defensive stocks for 14 consecutive trading days as of Thursday—the longest winning streak in over 15 years.
Even so, Goldman Sachs analysts say the recent strong performance is still insufficient to reflect the company's more optimistic growth expectations. Equity market positioning suggests that investors expect growth to be close to 2%, far below Goldman Sachs' forecast of 2.5%.
"Despite the rebound in cyclical stocks and the general optimism about the economy in our conversations with clients, the market does not appear to have fully priced in a potential economic acceleration in 2026," the report stated.
This acceleration is central to Goldman Sachs' view. The bank's analysts wrote that they expect overall U.S. economic growth to accelerate next year, which would help drive S&P 500 earnings per share growth by 12%.
(Article source: CLS)
