Goldman Sachs' Five Major Predictions for the US Stock Market in 2026: Bull Market Continues but Slows Down, AI Enters a New Phase

Glonghui Jan 8th｜Goldman Sachs strategists outlined their five major predictions for the US stock market in 2026 in a client report.Prediction 1: The bull market will continue, but the pace will slow down. Goldman Sachs strategists predict that the S&P 500 index may rise to around 7,600 points by the end of the year, implying an annual increase of about 12%. Robust economic growth, AI-driven productivity gains, and strong earnings from large companies will continue to provide fundamental support for the bull market.Prediction 2: Cyclical investments are expected to lead the market. Economic activity is set to rebound after the government restarts, the “Big and Beautiful Act”, looser financial conditions, and lower-than-expected economic impact from tariffs will all drive economic growth. These factors will support cyclical investments.Prediction 3: AI investment will continue to increase. Goldman Sachs predicts that capital expenditures this year are expected to increase significantly by about 36%, reaching $539 billion; by 2027, capital expenditures may increase by another 17% to $629 billion.Prediction 4: AI market enters a new stage. Goldman Sachs strategists refer to this new stage as the “third stage”, which may feature the following: a slowdown in capital expenditure growth; more companies will adopt AI; and a new wave of AI beneficiaries will emerge.Prediction 5: M&A activity remains active. The total value of M&A deals this year is expected to increase by about 15% compared to last year. Strong economic growth, loose financial conditions, and improved confidence among corporate leaders are all factors supporting active M&A activities.