Optimism for Global Stock Returns in 2026

Goldman Sachs analysts forecast a positive outlook for global equity markets in 2026, predicting a 9% increase in equity prices and an overall return of 11% including dividends, as of January 6, 2026. This anticipated growth is primarily driven by fundamental profit increases rather than rising valuations. The analysis suggests that the current market is in an optimism phase following a bear market that began during the COVID-19 pandemic. Historically, this phase is characterized by rising valuations, which could present upside risks to the forecasts.

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The report emphasizes the importance of geographic diversification, noting that in 2025, US equities underperformed compared to other major markets for the first time in nearly 15 years. European, Chinese, and Asian markets generated nearly double the total returns of the S&P 500, largely due to a decline in the US dollar. Analysts recommend that investors consider a mix of growth and value stocks across various sectors, with a particular focus on emerging markets.

Global Stocks Are Projected to Return 11% in the Next 12 Months

Despite the optimistic projections, concerns about market concentration and idiosyncratic risks persist. Goldman Sachs highlights that the current market's elevated valuations and reliance on a few large US companies echo previous market bubbles. However, unlike past booms, speculative trading remains subdued, and corporate leverage is low compared to historical standards. The biggest risks to the stock market rally include weaker-than-expected economic growth and potential hawkish shifts by the Federal Reserve, although neither scenario is deemed likely in the near term.

The S&P 500 Is Expected to Rally 12% This Year

As earnings season approaches, Goldman Sachs anticipates increased volatility, suggesting that options traders may be underestimating potential stock movements. The firm identifies companies such as Meta Platforms, UnitedHealth Group, and Robinhood as likely to exceed earnings expectations, while Texas Instruments and Southwest Airlines may face declines. Analysts recommend strategies to capitalize on anticipated volatility, particularly in sectors like utilities and healthcare.

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Goldman Sachs and UBS Group express optimism regarding Chinese stocks, projecting a 20% rise in the MSCI China Index and a 12% increase in the CSI 300 Index for 2026. Factors contributing to this positive outlook include structural changes in corporate profitability, increased foreign investor participation, and a shift towards technology and AI-driven growth. Analysts note that the earnings growth for the MSCI China Index could exceed 14%, driven by internet platforms and high-end manufacturing.

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The overall sentiment from Goldman Sachs indicates a cautiously optimistic outlook for global equity markets in 2026, driven by fundamental earnings growth and geographic diversification. While risks remain, particularly regarding market concentration and economic conditions, the potential for significant returns, especially in emerging markets and sectors like technology, presents opportunities for investors.

Global Stocks Are Projected to Return 11% in the Next 12 Months