In 2026 outlook, Goldman Sachs says US economic and stock market risks are overstated.
The firm underscored US strength and projects continued growth.
US stocks are in good shape, but Goldman warns of potential bubbles in bitcoin and generative AI.
American investors are worried.
They've been worried for a while now: that a recession is coming, that stock valuations are overheated, and that AI spending is the only thing keeping the economy (and markets) afloat.
And if you're in the wealth management business, like Goldman Sachs, it's your job to listen to these concerns. To nod solemnly and empathize as your millionaire clients lay bare their greatest fears. And then it's your job to tell them that, actually, things aren't so bad, and despite all the apparent chaos out there, it would be quite unwise to cash out your chips in the US stock market.
Goldman Sachs' wealth management unit did just that Monday, sending out a report to clients saying that the outlook for the US economy and stock market is bright — and that most of the concerns keeping investors awake at night are overblown.
"Clients — and also some colleagues — are now asking whether it is time to reduce exposure to US equities in favor of other developed and emerging markets," the firm's Investment Strategy Group wrote in its 2026 outlook report. But it concludes that many of the perceived risks dominating conversations these days — from tariffs to government dysfunction to market concentration — are overstated, and that the most significant risk for equities, a US recession, is unlikely.
The group puts the probability of a recession at 25%, down from last year's estimate of around 35%. Instead, Goldman's base-case projection calls for continued economic expansion and robust earnings growth for the S&P 500.
"We wanted to emphasize that in spite of all the headlines that you read about 'Is America on the decline?' et cetera, we want to make a very strong stand and say, 'No, that is not the case,'" Sharmin Mossavar-Rahmani, Chief Investment Officer of the Investment Strategy Group, said in a media appearance for the report's release.
The US remains the preeminent destination for investors around the world, Mossavar-Rahmani said — and a "surprising" number of popular narratives miss what's actually driving growth and returns.
"We want to dispel a couple of myths," Mossavar-Rahmani said.
Here are some of the other takeaways from Goldman's Investment Strategy Group, and what they're telling wealthy clients to do with their money in 2026.
The US is still the world's preeminent investment destination
Goldman Sachs
Goldman's team argues that "US preeminence" is evident across multiple measures, including economic wealth, labor productivity, deep capital markets, and natural resources — advantages they say are difficult for other major economies to match.
They also point to US leadership in key innovation areas, including semiconductors, biotechnology, and AI, as well as the scale and liquidity of US equity and bond markets.
The US remains a magnet for global capital, and tariffs haven't changed that
Goldman Sachs
Despite political turmoil and tariff uncertainty, Goldman says the US remains a magnet for global capital.
"When people say, 'Oh, money's flowing out of the US.' It actually isn't. We had one month when that was the case," Mossavar-Rahmani said.
That month of outflows came last April, in the aftermath of Trump's Liberation Day tariff plan announcement. Since then, foreign investors have flooded back into the US.
The US economy's dependence on AI investment has been exaggerated
Goldman Sachs
One argument for US economic fragility is that the boom in AI-adjacent tech spending — including data centers, chips, and power infrastructure — is propping up GDP.
The Organization for Economic Co-operation and Development, which has a more dour global economic outlook, estimated the US would have been in a recession in the first half of last year if not for AI investments. A report from Deutsche Bank shows they're not alone in that sentiment.
But Goldman says that view is off base, and that people underestimate how much consumption contributes to GDP. The bank's investment strategy group estimates all tech-related spending accounted for 0.5% of the 2.1% GDP growth in 2025, and Goldman's chief economist says AI capital expenditures accounted for just 0.1%.
The estimate, which "includes everything related to AI, including data centers," Mossavar-Rahmani said, is "probably a little bit on the high side because they're trying to include all the power generation as well, all the utility infrastructure that has benefits elsewhere other than just AI."
The Magnificent Seven aren't the only game in town
Goldman Sachs
This dovetails with the myth that the US stock market is dependent on AI and the Magnificent Seven stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla), according to Mossavar-Rahmani.
"It's just not correct that AI has driven everything in the US, including all earnings and including S&P 500 returns," Mossavar-Rahmani said.
While no one disputes the incredible performance of these tech titans, Goldman contends that the rest of the S&P 500 receives short shrift and that earnings growth and returns remain respectable even after stripping out the contributions from the Magnificent Seven.
"This idea that it would be a poor economy, a weak economy, no earnings, no returns is again, just another falsehood," Mossavar-Rahmani said.
Valuations are high — but Goldman doesn't see a crash setup
Goldman Sachs
The S&P 500 hit record highs last year, and investors often worry that new highs mean a painful drop is imminent. In reality, history shows that the market usually continues to post robust gains after hitting an all-time high, Goldman notes.
While Goldman acknowledges valuations are elevated, it doesn't see an overheated market reminiscent of past market bubbles. It expects the S&P 500 to continue its rise in 2026, with a base-case estimate of a 7% total return and 10% earnings growth.
Goldman's "good" scenario assumes a 17% return; its "bad" scenario assumes a 15% decline in a recession. (The team assigns a higher probability to upside than downside.)
Tech stocks are profit juggernauts compared with the Dot Com bubble
Goldman Sachs
"We do think that there are some good fundamental reasons why valuations have increased over time that are not just because of speculative excesses," said Brett Nelson, head of tactical asset allocation within Goldman's investment strategy group.
In the run-up to the Dot Com bust at the turn of the century, for example, valuations and investor exuberance were divorced from earnings reality, which isn't the case today.
Yes, the S&P 500 is highly concentrated, Goldman says, but today's tech companies have enormous profit margins justifying their stock valuations, not just hype.
The bubble isn't in stocks — it's in bitcoin
Goldman Sachs
Goldman isn't worried about a bubble in US equities. Where its investment strategists do see cause for concern is bitcoin.
"We do think bitcoin is a bubble," Mossavar-Rahmani said, noting that explosive price behavior in the cryptocurrency usually precedes a steep drawdown.
"We are even more convinced than we were in 2021 that bitcoin has no real value, that it is a speculative and trading asset and that only questionable practices support its current price," the 2026 outlook report says.
Watch out for gold and genAI companies, too
Goldman Sachs
Another area of concern is gold, which is at unsustainable price levels unless central banks — especially the Chinese government and households — continue to buy it to prop it up, Mossavar-Rahmani said.
"We do not recommend clients use gold or bitcoin as a hedge in their portfolios," the report says.
There are also "pockets of euphoria" in generative AI, with some public and private companies carrying bubble-like valuations, according to Goldman's outlook, which calls out the circular financing, easy credit, and questionable economics, coupled with soaring expectations.
"Some AI company founders and CEOs of the major companies involved with AI have raised expectations to an unrealistic level about what AI will deliver in the near future in terms of both revenues for the AI companies and productivity gains for enterprises leveraging AI," the report says.