• Investors are broadly bullish on equities, particularly in tech and TMT sectors, while showing caution toward corporate credit and AI-related risks.
  • Clients expect U.S. real GDP growth of 1.5% to 3.5% in 2026, aligning with forecasts for S&P 500 earnings growth and potential Fed rate cuts.
  • Sentiment leans toward lower Treasury yields and bullishness on gold, driven by fiscal concerns and central bank buying, even as AI is seen as both a key driver and top risk.

A recent survey of over 900 Goldman Sachs (GS) clients indicates a cautiously optimistic outlook for U.S. stocks and the economy as 2026 approaches. According to people familiar with the matter, the findings highlight a preference for equities, especially in technology and telecommunications, media, and technology (TMT) sectors, while consumer stocks are less favored. This sentiment comes amid expectations of moderate economic expansion, with real GDP growth projected to fall within a 1.5% to 3.5% range next year, consistent with Goldman's own forecast of around 2.5% growth and an acceleration in 2026.

Efforts to gauge market sentiment have revealed that many investors anticipate the Federal Reserve to initiate a rate-cutting cycle in the first half of 2026, with about two reductions expected. However, Goldman analysts note this path may be "optimistic" and warn of potential "hawkish cuts," where policy easing could be accompanied by higher future rate projections. Without such supportive monetary policy, the equity rally might face headwinds, particularly if economic growth undershoots expectations. In real-time market data, this outlook has contributed to a slight uptick in S&P 500 futures, though volatility remains as traders digest the implications.

When it comes to corporate credit, the survey paints a more cautious picture. Most respondents expect wider credit spreads, even as they foresee substantial AI-related bond issuance in the coming years. This dichotomy underscores the complex risk appetite among institutional investors, who are balancing growth opportunities with safety concerns. For instance, nearly 70% of clients report bullishness on gold, attributed to ongoing central bank purchases and fiscal sustainability worries, while over half hold bearish views on crude oil. These positions reflect a broader trend of hedging against potential market disruptions.

AI emerges as a double-edged sword in the survey results. Clients identify a slowdown in AI adoption as the biggest threat to equities, even as Goldman and other banks project that mega-cap tech stocks, often referred to as the "Magnificent Seven," will drive roughly 46% of S&P 500 earnings growth in 2026. According to analysts, this growth is fueled by AI-driven productivity gains and revenue expansion, with some targets suggesting the S&P 500 could reach 7,600 to 7,800 by that year. Yet, there's a growing debate among market participants about whether much of the AI premium is already priced in, raising questions about future returns relying more on realized earnings than multiple expansion.

In terms of sector performance, cyclical areas like industrials, materials, consumer discretionary, and real estate are expected to see the biggest earnings acceleration in 2026, assuming an easing of tariff pressures and broader economic upswing. This aligns with Goldman's argument that markets may be underpricing the cyclical recovery, with current positioning still implying sub-2% growth despite more upbeat forecasts. As one portfolio manager paraphrased, "We're seeing a shift toward quality growth, but we're mindful of overconcentration risks in tech." Attempts to reach Goldman Sachs for additional comment were not immediately successful.

Looking ahead, the short-term outlook suggests modest S&P 500 upside, supported by earnings growth and eventual Fed easing, with tech and TMT remaining leaders but room for cyclical catch-up. Risks include a slowdown in AI adoption, economic growth falling short, or a more restrictive Fed stance, all of which could challenge equity valuations and widen credit spreads. In the longer term, if scenarios play out as forecast, the market could approach higher targets, but much will depend on the diffusion of AI gains into smaller firms and broader sectors. This survey underscores the nuanced views shaping investment strategies as 2026 draws nearer.

*Correction: An earlier version of this article misstated the percentage of clients bullish on gold; it is nearly 70%, not over 70%.