• Goldman Sachs strategist Peter Oppenheimer forecasts U.S. equities will post the weakest returns among major regions over the next decade, with the S&P 500 projected for 6.5% annual gains.
  • Emerging markets, particularly China and India, are expected to lead with 10.9% yearly returns, while Europe and Japan are also seen outperforming the U.S.
  • The call for international diversification is driven by high U.S. valuations and stronger growth prospects abroad, signaling a potential shift after years of American market dominance.

Goldman Sachs is advising clients to look beyond U.S. borders for equity returns, with a new long-term forecast projecting American stocks will trail their global peers for the next ten years. Chief Global Equity Strategist Peter Oppenheimer expects the S&P 500 to deliver annualized gains of just 6.5%, the lowest among the major markets he analyzed.

This outlook marks a significant departure from the recent past, where U.S. indices have been standout performers. The call is rooted in what Oppenheimer describes as "stretched" valuations for U.S. equities and a belief that faster nominal GDP growth and corporate reforms will fuel stronger performance in other parts of the world. The firm's projections see emerging markets leading the pack with 10.9% annual returns, followed by Asia ex-Japan at 10.3%, Japan at 8.2%, and Europe at 7.1%.

"The U.S. market is priced for perfection," said a person familiar with the matter, summarizing the internal view at Goldman. The concentration of the S&P 500 in a handful of mega-cap technology stocks, which now account for roughly a quarter of the index's value, is seen as a key vulnerability. Any disappointment in their growth or a shift in monetary policy could disproportionately impact returns.

Efforts to reach a Goldman Sachs spokesperson for additional comment were not immediately successful.

The forecast arrives as the S&P 500 has notched some of its strongest two-year returns since 1928, a rally largely powered by the tech sector. However, Oppenheimer notes that the benefits from the artificial intelligence boom are unlikely to be confined to the U.S., creating investment opportunities in global tech infrastructure and services. The analysis suggests a "structural shift" is underway, where higher starting valuations and the prospect of elevated long-term interest rates will act as a persistent drag on U.S. performance.

For institutional and retail investors alike, the implications are clear: a long-standing home-country bias may need to be reassessed. The research underscores that stock-picking and strategic geographic allocation will become increasingly critical as market correlations decline. While the U.S. market isn't forecast to collapse, its era of clear leadership appears to be ending, according to the bank's decade-long view.