-
Goldman Sachs is calling for a sharp rise in earnings in 2026 – and says the market isn’t ready.
-
The biggest winners may be boring cyclical stocks, not the AI titans.
-
AI is dominating the headlines, but its earnings impact is small compared to the coming macro boom.
Investors are fixated on artificial intelligence and the mega-cap tech giants that drive most of the stock market’s gains. But Goldman Sachs says the bigger opportunities next year may come from elsewhere.
“At the sector level, we expect the 2026 acceleration in economic growth to boost EPS growth most in cyclical sectors including Industrials, Materials and Consumer Discretionary,” Goldman analysts wrote in a report Thursday. Analysts noted that the firm’s broader forecast also incorporates the reduction of tariff pressures.
In line with that view, analysts said they expect earnings per share of real estate companies to increase from 5% this year to 15% next year, while those in consumer discretionary are expected to increase from 3% to 7%.
Industrial companies are also set for a big rebound, with EPS growth forecast to accelerate from 4% to 15%.
In contrast, Goldman expects EPS growth for information technology companies to moderate from 26% in 2025 to 24% in 2026.
Signs of this change are already being seen in market action.
In a separate report Friday, Goldman noted that cyclical stocks rallied, beating defensive names for 14 trading days through Thursday — the longest streak in more than 15 years.
Even so, Goldman analysts say the recent outperformance is still not enough to reflect the firm’s more optimistic growth outlook. Market positioning within equities suggests investors expect growth closer to 2% — well below Goldman’s 2.5% forecast.
“Despite the cyclical rebound and widespread economic optimism in our client conversations, the market does not appear to be fully pricing in the likely economic acceleration in 2026,” the analysts wrote.
That acceleration is central to Goldman’s view. The bank’s analysts wrote that they expect overall US growth to pick up next year, helping to drive a 12% rise in S&P 500 earnings per share.
Goldman’s latest reports come as investors continue to debate whether the stock market is breaking out in a speculative bubble fueled by AI enthusiasm.
The LS&P 500 is up 16% this year, with the “Magnificent Seven” megacap tech stocks now accounting for about a third of the index’s weight.
Shares of AI chip maker Nvidia — the world’s most valuable publicly traded company — are up 30% this year alone.